What is the difference between the short run, long run and very long run?
What will be an ideal response?
In the short run, technology, plant size and equipment are fixed. In the long run, firms are able to change their plant sizes and enter and exit the market. Technology is constant over this period. Only in the very long run can technology change and firms develop and offer new products.
You might also like to view...
The interest rate at which businesses borrow to fund their investments is higher than the real interest rate for short-term, safe loans, because ________
A) business borrowers sometimes default on their loans B) autonomous investment is not dependent on borrowed funds C) the central bank controls the short-term, safe interest rate D) the interest rate is negatively-related to business optimism E) all of the above
Which of the following statements about taxation is TRUE?
A) Increasing taxes will always increase tax revenues. B) Static tax analysis recognizes that an increase in taxation could lead to a decrease in tax revenues. C) Dynamic tax analysis assumes that an increase in taxation will leave the tax base unchanged. D) There is a tax rate at which tax revenues are maximized.
The phrase "a weaker U.S. dollar" means that the dollar
a. has been depreciating b. has been appreciating c. is not in equilibrium on the foriegn exchange market d. is fluctuating greatly e. buys less than one unit of a foreign currency
What are the accurate coordinates of the new equilibrium price?
a. P1; Q2
b. P1 Q1
c. P2; Q1
d. P2; Q2