Suppose the price of capital and labor remain constant. As a firm's expenditures for capital and labor increase, its isocost line
A) rotates outward on the Y-intercept. B) shifts in parallel to the original isocost line.
C) rotates outward on the X-intercept. D) shifts out parallel to the original isocost line.
D
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Which of the following statements explains why monopolies weaken the functioning of the invisible hand?
A) A monopoly is a price taker. B) The quantity produced by a monopoly is too low. C) Monopolies face an upward sloping demand curve. D) A monopoly sets the price of its good below marginal costs.
If the price of gasoline has increased from $2 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 400, then you know that the inflation adjusted price of gasoline has
A. decreased. B. increased. C. remained constant.
Which of the following is a statement with positive economic analysis?
A) Lower wages increase employment and reduce the unemployment rate. B) Slower money growth reduces inflation. C) A reduction in the size of the budget deficit will reduce interest rates. D) all of the above
The situation of oligopoly suggests
A. many firms compete in an industry. B. mergers have not occurred. C. no barriers to entry exist. D. interdependence among firms.