Marginal cost equals (i) change in total cost divided by change in quantity produced. (ii) change in variable cost divided by change in quantity produced. (iii) the average fixed cost of the current unit
a. (i) and (ii) only
b. (ii) and (iii) only
c. (i) only
d. (i), (ii), and (iii)
a
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Refer to Edgeworth Box Economy. In an Edgeworth box, points within the region of mutual advantage represent allocations that
a. can be achieved by a competitive market. b. both consumers prefer to the initial endowment. c. exhaust the potential gains from trade. d. are Pareto optimal.
Explain why a voluntary production quota is difficult to operate
What will be an ideal response?
Because of securitization, a new class of residential mortgages offered to borrowers with less-than-stellar credit records developed. These mortgages are known as
A) risk-enhanced mortgages. B) subprime mortgages. C) bundled mortgages. D) adjustable-rate mortgages.
Real business cycle and new Keynesian models disagree upon
a. whether people form their expectations rationally. b. whether changes in unemployment are voluntary or involuntary. c. whether individuals engage in optimizing behavior at all times. d. whether changes in the money supply affect output in the long-run.