Tom and Jerry have two tasks to do all day: make dishes and build fences. If Tom spends all day making dishes, he will have make 16 dishes. If he instead devotes his day to building fences, Tom will build 4 fences. If Jerry spends his day making dishes, he will make 14 dishes; if he spends the day building fences, he will build 7 fences. For Jerry, the opportunity cost of building a fence is ________ dishes made.
A. 7
B. 4
C. 14
D. 2
Answer: D
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In the long run, total spending only influences:
A. potential output. B. actual output. C. productive capacity. D. inflation.
Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost. The monopoly can increase its profit by
A) shutting down. B) lowering its price and increasing its output. C) raising its price and decreasing its output. D) lowering its price and decreasing its output. E) not changing its price and increasing its output.
Refer to Figure 13-3. Suppose the economy is at point A. If government spending increases in the economy, where will the eventual long-run equilibrium be?
A) A B) B C) C D) D
A production function assumes a given
A) technology. B) set of input prices. C) ratio of input prices. D) amount of capital and labor. E) amount of output.