Long-run average cost is never greater than short-run average cost because in the long run
A) capital costs equal zero.
B) the firm can move to the lowest possible isocost curve.
C) wages always increase over time.
D) wages always decrease over time.
B
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An individual who is suffering from money illusion is more concerned with
A) real prices than with nominal prices. B) nominal prices than with relative prices. C) relative prices than with nominal prices. D) relative prices than with real prices.
When demand is unit elastic, a change in price will cause
A) a change in total revenue in the same direction. B) a change in total revenue in the opposite direction. C) no change in total revenue. D) a change in total revenue in either direction depending on whether the price is increasing or decreasing.
You are considering the purchase of a business that is currently earning $25,000 per year in after-tax profit. If these conditions are expected to continue year after year into the future, and the interest rate is currently 10 percent, the current market value of this business is
a. $2,500. b. $25,000. c. $250,000. d. $2,500,000.
Assuming the aggregate supply curve is vertical, which of the following is most likely to occur if the Fed pursues expansionary monetary policy?
A. The equilibrium output will increase but the price level will stay the same. B. The equilibrium price level will increase but output will stay the same. C. The equilibrium price level and output will both decrease. D. The equilibrium price level and output will both increase.