Why cannot firms leave the industry in the short run?
What will be an ideal response?
In the short run, the firm has at least one input that is fixed. Therefore, while the firm can shut down in the short run, it cannot get rid of its fixed costs. Fixed costs must be paid in the short run.
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Chuck Stake never eats vegetables, although he can afford to buy them. According to the economic way of thinking, Chuck
A) must have a serious physiological aversion to vegetables. B) was probably forced to eat them as a kid, and now hates them. C) believes the additional benefits from eating vegetables are outweighed by the additional costs. D) has studied economics enough to know that nobody needs to eat their vegetables.
Direct income transfers account for approximately what percentage of total government spending?
a. 10 percent b. 30 percent c. 50 percent d. 60 percent
The ______ budget constraint shows the tradeoff between present and future consumption.
a. utility-maximizing b. time-value of money c. intertemporal choice d. inflation
Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher