An expansion path shows
A) the level of sales necessary for a firm if it wants to expand.
B) the level of long-run average cost at different scales of operation.
C) the returns to scale at each level of output.
D) the least-cost combination of inputs for each level of output.
D
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Suppose a monopolist has zero marginal cost but positive recurring fixed costs. Then, if it is efficient to produce, the efficient quantity to produce occurs where demand crosses the horizontal (quantity) axis.
Answer the following statement true (T) or false (F)
The ABC Nail Company has entered into a collusive agreement with the other firm in the industry, the DC Nail Company. What occurs in the nail industry if ABC decides to cheat on the agreement?
A) ABC lowers the price of its nails. B) The total industry output increases. C) The total profits in the nail industry will decrease. D) All of the above answers are correct.
One of describing the debate between activists and non-activists is that
A) activists are pessimistic about the self-correcting powers of the economy but non-activists are optimistic. B) activists tend to be oriented to the long-run but non-activists are short-run oriented. C) non-activists are optimistic about the efficacy of stabilization policy but activists are pessimistic. D) A and B are both correct.
Suppose the capital gains tax is 28 percent and you purchased a house ten years ago for $80,000. If you sold the house today you would get $140,000. Your tax liability would be
A) $39,200. B) $16,800. C) indeterminate without knowing the inflation rate. D) indeterminate without knowing the personal income tax rate.