Suppose Bev's Bags makes two kinds of handbags-large and small. Bev rents an industrial space where she keeps the fabric, the industrial sewing machine, her measuring board and cutting shears, extra needles, thread and buttons, and labels. If Bev were to produce no bags, which of the following is true regarding Bev's costs?
A. The variable cost of fabric would drop to zero.
B. The fixed cost of thread would stay the same.
C. The variable cost of cutting shears would drop to zero.
D. All of these are true.
A. The variable cost of fabric would drop to zero.
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Refer to Figure 16-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely pursue
A) expansionary fiscal policy. B) expansionary monetary policy. C) contractionary fiscal policy. D) contractionary automatic stabilizers. E) contractionary monetary policy.
The short-run Phillips curve shifts upward whenever:
a. inflation rises. b. a negative supply shock occurs. c. unemployment rises. d. all of the above.
Many colleges have decided to ban the use of halogen lamps because they are deemed to be a fire hazard. This is an example of which type of solution?
a. creating new property forms b. levying a pollution compensation tax c. creating obligatory controls d. bubble concept, similar to emission standards e. free market efficiency
Suppose real GDP is $800 billion when the MPC is 0.80, and people decide to increase their saving by $30 billion. Before this change, the economy was in equilibrium with people intending to save $100 billion and producers intending to invest $100 billion. The new equilibrium level of real GDP is:
A. $600 billion. B. $650 billion. C. $680 billion. D. $730 billion.