"The long-run average cost curve is derived from adding all short-run average cost curves together." Do you agree or disagree? Explain
What will be an ideal response?
Disagree. The long-run average cost curve is derived as the curve that is tangent to the short-run average cost curves rather than adding them together. The reason for the tangent points is that the firm will try to change any of its inputs whenever they lead to a lower average cost.
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If Japan has a comparative advantage over Canada in the production of computers, which of the following must be true?
a. Supply of unskilled labor in Japan is higher than that in Canada. b. Japan incurs a lower input cost in the production of computers. c. Japan incurs a higher input cost in the production of computers. d. Japan has a lower opportunity cost in the production of computers. e. Japan has a higher opportunity cost in the production of computers.
When a country allows trade and becomes an importer of steel,
a. the losses of the domestic producers of steel exceed the gains of the domestic consumers of steel. b. the losses of the domestic consumers of steel exceed the gains of the domestic producers of steel. c. the gains of the domestic producers of steel exceed the losses of the domestic consumers of steel. d. the gains of the domestic consumers of steel exceed the losses of the domestic producers of steel.
The following data about a hypothetical economy are in billions of dollars.Personal Consumption Expenditures$4,500Consumption of Fixed Capital150Gross Private Domestic Investment800Government Purchases950Exports65Imports85Refer to the above data. GDP in this economy is:
A. $6380 billion. B. $6080 billion. C. $6230 billion. D. $6400 billion.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.