Answer the following statements true (T) or false (F)
1. If a firm produces zero output in the short run, then its profits will also be zero.
2. In the long run, a firm can increase its output quantity, but it will be limited by the size of its existing production plant.
3. When diminishing marginal returns starts occurring, the addition of successive units of a variable resource to a fixed resource will cause the firm's production to diminish.
4. Over the range of positive, but diminishing, marginal returns for an input, the total product curve increases at a decreasing rate.
5. If the average product of labor equals 4 at all levels of output, the marginal product of labor is also equal to 4 at all levels of output.
1. FALSE
2. FALSE
3. FALSE
4. TRUE
5. TRUE
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The supply curve of U.S. dollars shifts leftward. This could have been influenced by ________
A) a rise in the U.S. interest rate differential B) a fall in the expected future exchange rate C) an increase in the U.S. exchange rate D) a decrease in the U.S. exchange rate
One advantage of a consumption tax is that there are fewer problems with inflation.
A. True B. False C. Uncertain
In open economies
A) saving and investment are necessarily equal. B) as in a closed economy, saving and investment are not necessarily equal. C) saving and investment are not necessarily equal as they are in a closed economy. D) saving and investment are necessarily equal contrary to the case of a closed economy. E) investment always refers to the domestic stock market.
Assume a market that has an equilibrium price of $8. If the market price is set at $7, consumer surplus:
A. rises for some because of the decreased price. B. decreases for some because of fewer transactions taking place. C. Both of these statements are true. D. Neither of these statements is true.