In a two-input model you can tell that a non-optimal short-run production decision is being made if
a. all decisions in the short run are nonoptimal
b. the rate of technical substitution is equal to the ratio of the input prices
c. the rate of technical substitution is not equal to the ratio of the input prices
c
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Happy Bagels sells its bagels for $6 each and the firm has a constant marginal cost of $4 per bagel, which is equal to its (constant) average total cost. If Happy Bagels does not sell a bagel the day it is produced, the bagel is sold as day-old for $2. If Happy Bagels is currently holding 50 bagels in inventory and the probability that Happy Bagels will sell 50 bagels or more is 0.60, which of
the following statements is true? A) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to increase its inventory. B) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to decrease its inventory by exactly one -half. C) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to decrease its inventory. D) Happy Bagels is holding the profit-maximizing, optimal level of inventory.
An increase in the expected future price of a good will cause the current demand for the good to
a. decrease, which is a shift to the left of the demand curve. b. decrease, which is a shift to the right of the demand curve. c. increase, which is a shift to the left of the demand curve. d. increase, which is a shift to the right of the demand curve.
When does a shortage occur?
a. When price is less than equilibrium price. b. When goods are scarce. c. When quantity demanded is less than quantity supplied. d. When quantity demanded exceeds quantity supplied at the equilibrium price. e. When some of the people who need the product are not willing and able to buy it at the equilibrium price.
If an economy is operating at short-run equilibrium below the full-employment level of real GDP, the self-correction model result is that:
A. unemployment increases. B. unemployment falls. C. cyclical unemployment increases. D. frictional and structural unemployment increase.