The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.
The average total cost curve is represented by which curve?
A. I
B. II
C. III
D. IV
Answer: C
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
A firm's demand for labor depends on the
A) nominal wage rate because it pays workers in dollars. B) real wage rate, which equals the nominal wage divided by the price level. C) real wage rate, which equals the nominal wage divided by the hours worked. D) nominal wage rate, which equals the real wage divided by the price level. E) supply of labor.
The government passes a law which doubles the wages of all workers. Aggregate supply will ________, and real GDP will ________, and the price level will ________
A) increase; remain the same; increase. B) remain the same; increase; increase. C) increase; increase; remain the same. D) decrease; increase; increase. E) decrease; decrease; increase.
When existing firms lose customers and profits due to entry of a new competitor, a
a. predatory-pricing externality occurs. b. consumption externality occurs. c. business-stealing externality occurs. d. product-variety externality occurs.