If a firm's production process exhibits increasing returns to scale, then doubling all the firm's inputs will lead output to ________.
A. double.
B. more than double.
C. fall by one-half.
D. less than double.
Answer: B
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The short-run aggregate supply curve
A) is vertical. B) shows the impact changes in the price level have on the quantity of real GDP when resource prices are constant. C) illustrates the level of potential real GDP. D) shifts whenever the price level changes.
In the past few years the demand for donuts has greatly increased. This increase in demand might best be explained by:
A. an increase in the cost of making donuts. B. a change in buyer tastes. C. an increase in the price of coffee. D. consumers expecting donut prices to fall.
The production possibilities curve represents
A. the maximum combination of goods and services that can be produced with fixed resources and technology, given efficient use of the resources. B. the maximum amount of labor and capital available to society. C. the maximum rate of growth of capital and labor in a country. D. the combinations of goods and services among which consumers are indifferent.
Recently Apple Computer developed Apple's new iTunes Music Store, which offers more than 200,000 songs from five major record labels, for use with Apple's iPod and iMac. More than a million songs were downloaded the first week alone! In economic terms,
CEO Tim Cook helped convert capital and labor inputs into products consumers use. Any activity that results in the conversion of resources into products that can be used in consumption is A) not profitable. B) a start up venture. C) demand. D) production.