As a table manufacturing company produces more tables, the average total cost of each table produced increases. This could be because:
a. Total fixed costs are decreasing as more tables are produced
b. There are economies of scale
c. There are diseconomies of scale
d. Total variable cost is decreasing as more tables are produced.
c
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Which of the following best explains the negative slope of the short-run Phillips curve?
A) Short-run aggregate supply increases at the same pace as aggregate demand increases so that inflation and unemployment do not change. B) Weak growth in aggregate demand keeps the economy below potential GDP, so unemployment rises but inflation falls. C) Aggregate demand grows so quickly that the inflation rate rises as unemployment rises. D) Long-run aggregate supply increases quickly enough that inflation falls as unemployment also falls.
Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway. Which of the following statements is correct?
a. The benefits are usually easier to measure than the costs. b. Because human life is priceless, any measure to increase traffic safety would generate benefits that outweigh the costs. c. Estimating the value of a human life is difficult but necessary to evaluate the proposal. d. Both a and b are correct.
"I recognize that the market is effective at getting resources to their most valued uses, but I also recognize that the market can produce results that are grossly unfair." This speaker is implying:
A. neither market failure nor failure of market outcome. B. both market failure and failure of market outcome. C. market failure but not failure of market outcome. D. failure of market outcome but not market failure.
If there are short-run profits in a competitive industry, will firms enter or exit over the long run? At what point will the final equilibrium be achieved?
What will be an ideal response?