Distinguish the short run from the long run. Generally, what causes costs of production to vary with output in the short run? What generally causes costs of production to vary in the long run?
What will be an ideal response?
The short run is any amount of time in which at least one resource is fixed. In the short run there are some fixed costs. In the long run, nothing is fixed. There are no fixed costs in the long run. Costs of production vary with output in the short run because of increasing and diminishing returns. Costs of production vary with output in the long run because of economies and diseconomies of scale.
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Aggregate supply
A) is the overall wealth within an economy. B) is the total of all planned production in an economy. C) is the total amount of raw materials available in an economy. D) is the total amount of money circulating in an economy.
If Walmart issues $250 million in new stock to finance the renovation of their retail stores, this is an example of
A) a stock market transaction. B) indirect finance. C) a bond market transaction. D) direct finance.
The environmental problems of China is not caused by
A. a lack of central planning in the economy. B. the burning of low-quality, high-sulfur coal. C. a lack of pollution controls. D. the one-child policy of population control.
The average variable cost curve is a mirror image of the:
A. average product curve. B. total product curve. C. marginal product curve. D. marginal cost curve.