The effect of spreading out the fixed costs outweighing the effect of diminishing returns is illustrated by the ________ average cost curve ________.
A. long-run; decreasing
B. long-run; increasing
C. short-run; decreasing
D. short-run; increasing
Answer: C
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In the long run, the price level adjusts
A) to achieve money market equilibrium. B) so that the inflation rate equals the growth rate of real GDP. C) so that the inflation rate equals zero. D) so that the inflation rate is moderate. E) so that the real interest rate equals the nominal interest rate.
A linear downward-sloping demand curve has price elasticities (in absolute values) that
A) remain constant along the demand curve. B) decrease as price decreases. C) increase as price decreases. D) are greater than or equal to 1.
The law of diminishing marginal product shows the relationship
A. between inputs and outputs for a firm in the long run. B. between short-run and long-run outputs of a firm. C. between inputs and outputs for a firm in the short run. D. between accounting and economic profits.
Suppose an industry is composed of 10 firms. Each firm's share of total sales in the industry is 10 percent. If two of the firms merge, then the four-firm concentration ratio in the industry is
A. 50 percent. B. 45 percent. C. 40 percent. D. unable to determine.