When an input represents a small proportion of a firm's total costs, then
A) demand for the input will tend to be less elastic.
B) the input demand will vary significantly with a change in input price.
C) the usage of the input cannot be varied in the production function.
D) output demand will be highly elastic.
Answer: A
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The major objective of the 1986 tax reform was to: (i) enhance efficiency by lowering marginal tax rates; (ii) enhance equity by closing "loopholes."
a. i and ii b. i but not ii c. ii but not i d. neither i nor ii
A 65 percent chance of winning $10 and a 35 percent chance of losing $5 would be classified as a(n)
A. fair gamble. B. worse-than-fair gamble. C. unfair gamble. D. better-than-fair gamble.
Suppose an expansionary monetary policy reduces nominal interest rates. If this is the case, it follows that the expansionary monetary policy must have:
A. increased expected inflation. B. reduced expected inflation. C. increased expected inflation less than it reduced real interest rates. D. reduced real interest rates less than it increased expected inflation.