Following is a firm's expansion path. The price of capital is $5 per unit; the price of labor is $2 per unit. 
When output is 20 units, what is long-run average cost?
A. $3.50
B. $2
C. $4.50
D. $4
E. none of the above
Answer: E
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"Politics is too often the thing that gets in the way of good economic policy being implemented." The economist who said this most likely
A) believes that fiscal policy is preferable to monetary policy when it comes to stabilizing the economy. B) prefers discretionary monetary policy to rule-based monetary policy. C) believes that there will be a lot of crowding out if government spending is increased. D) prefers rule-based monetary policy to discretionary monetary policy.
If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is
A) -1.25. B) elastic. C) Both A and B above. D) Neither A nor B above.
The monopolist should NEVER produce in the
A) elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price. B) inelastic segment of its demand curve because further lowering of the price reduces total revenue. C) range of output for which the price elasticity of demand is infinity. D) range of output for which there is a price elasticity exceeding one.
When a price floor is set above the equilibrium price, quantity supplied will exceed quantity demanded, resulting in
a. excess demand or shortages. b. excess supply or surpluses. c. equilibrium prices. d. price controls.