A firm's ______ are costs that are incurred even if there is no output. In the short run, these costs _____ as production increases.
A. fixed costs; increase
B. fixed costs; do not change
C. variable costs; increase
D. variable costs; do not change
Answer: B. fixed costs; do not change
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Holding other factors constant, if Congress passes a 5% investment tax credit under which a firm receives $5 in tax refunds from the government for every $100 it spends on new capital equipment, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.
A. increase; decrease B. increase; increase C. decrease; increase D. increase; not change
A contestable market is similar to a perfectly competitive market in that there
A) are barriers to entry. B) are no barriers to entry. C) can be only one firm in the market. D) will be no entry if the existing firm earns an economic profit.
Wealthy people will tend to have vertical labor supply curves
A) only if their income effect just offsets their substitution effect. B) only if their income effect is greater than their substitution effect. C) only if their income effect is less than their substitution effect. D) only if they don't have an income effect.
A futures contract hedges against the risks associated with the volatility of spot price
Indicate whether the statement is true or false