Which of the following statements regarding a firm's long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?
A) The shape of the LRATC is affected by the law of diminishing returns.
B) The SRATC, but not the LRATC, can be used by a firm's managers for planning.
C) The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed.
D) The contribution of average fixed cost to LRATC is greater than its contribution to SRATC.
Answer: C
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If good 1 is essential for one person but not for the other, the first person will end up with all of good 1 in a competitive equilibrium within the Edgeworth Box.
Answer the following statement true (T) or false (F)
Refer to Figure 17-4. Consider the shift in the short-run Phillips curves shown in the above graph. This shift may be explained by
A) an increase in the expected rate of inflation from 4.0 to 5.5 percent. B) an increase in the natural rate of unemployment from 5.0 to 6.2 percent. C) either an increase in the natural rate of unemployment from 5.0 to 6.2 percent or an increase in the expected rate of inflation from 4.0 to 5.5 percent. D) None of the above is correct.
A firm that acquires a substitute product can try to reduce inter-product cannibalization by
a. Doing nothing b. Repositioning its product or the substitute so that they do not directly compete with each other c. Pricing each product at the same level d. Lowering the prices on both the products
Tom is an organic gardener. When Tom produces vegetables only for consumption by his family, a. the value of the vegetables he produces is not included in GDP
b. the value of organic vegetables cannot be included in GDP, because organic production does not fit a category of GDP. c. if Tom registers his garden with the Department of Agriculture, the value of his vegetables will be included in GDP. d. the value of farm production is not a part of GDP.