Figure 10-1
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A firm earns a profit of exactly zero at its optimal output level only if
A. P = MR.
B. P = MC.
C. P = AC.
D. P = SRAVC.
Answer: C
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Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
There is a technological advance in the production of digital watches. This will cause:
A. demand to increase. B. supply to increase. C. the price to increase. D. supply to decrease.
Because of improved productivity, wages increase 10 percent. As a result, gross domestic income increases. What happens to Gross Domestic Product?
A. Gross Domestic Product would not change since consumption expenditures would rise but investment spending would fall. B. Gross Domestic Product also increases since consumption expenditures would increase. C. Gross Domestic Product decreases as people pay more taxes on their higher incomes. D. Gross Domestic Product would decrease because businesses are spending more on wages.
The phrase "there's no such thing as a free lunch" is a common way of expressing the concept of efficient markets.
Answer the following statement true (T) or false (F)