Consider the following situation. Tuition at State University is $10,000 per year. Each of the students listed below paid their own tuition bills. Who among them incurred the greatest sunk cost?
A) The student who received a two-year associate's degree
B) The student who took five years to complete the bachelor's degree
C) The student who took ten years to complete the bachelor's, master's, and Ph.D. degrees
D) The student who dropped out during their first semester
E) The student who dropped out after their third year
C
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Which of the following can help to explain why higher inflation may lead to currency appreciations?
A) The interest rate is not the prime target of monetary policy. B) Most central banks adjust their policy interest rates expressly so as to keep inflation in check. C) Central banks increase the money supply leading to overshooting of the exchange rate. D) Inflation will increase the purchasing power of a currency. E) The world market does not adjust their currency trade to reflect inflation.
Suppose a monopolistically competitive industry evolved into a perfectly competitive industry. Which of the following statements is correct?
A) The industry would produce more output and charge a lower price after the change. B) The industry would produce at decreasing returns to scale. C) Elasticity of demand for the firm's product would remain the same after this change occurred. D) This industry would produce the same level of output at lower prices in the long run than before the change.
An improvement in a firm's technology that reduces its production costs will result in a(n):
a. rightward shift of the supply curve. b. increase in supply. c. increase in quantity supplied at any given price. d. all of these are true.
Many economists criticize monopolists because they produce at output levels that are not efficient, that is to say, monopolists
a. charge too high a price b. don't innovate c. produce a large quantity of waste d. usually don't produce at their minimum ATC e. may be profit conscious but they don't realize that maximum profit means maximum efficiency