(Long run) average cost curves are U-shaped when the production technology has decreasing returns to scale and the firm faces recurring fixed costs.
Answer the following statement true (T) or false (F)
True
Rationale: The recurring fixed costs are high on average for low levels of output but become small on average as output increases. The AC without the fixed costs is upward sloping when the technology has increasing returns to scale. Combined, these two facts give us the U-shape.
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Which of the following best describes a cartel?
a. As a monopolist, a group of monopolistically competitive firms that jointly reduce output and raise the price. b. As a monopolist, a group of cooperating oligopolists that jointly reduce output and raise the price. c. A monopolist that reduces output and raises price. d. A group of identical non-cooperative oligopolists that are able to reproduce a monopoly equilibrium through price rivalry.
One way the consumer price index (CPI) differs from the GDP chain price index is that the CPI:
a. uses current year quantities of goods and services. b. includes separate market baskets of goods and services for both base and current years. c. includes only goods and services bought by typical urban consumers. d. is bias free.
Goods that cost one dollar in the U.S. cost one euro in France, the real exchange rate would be computed as how many French goods per U.S. goods?
a. one b. the price of the U.S. goods c. the number of euros that can be bought with one U.S. dollar d. None of the above is correct.
Briefly describe the foreign exchange market.
What will be an ideal response?