Explain why the average cost curve for the long run differs from that for the short run.
What will be an ideal response?
The average cost curve for the long run differs from that for the short run because, in the long run, input quantities generally become variable.For example, in the short run, a chicken breeder can raise, at most, only the number of chickens that he or she can crowd into his or her coops’ current capacity. He or she can build more chicken coops, but if it turns out that they are much larger than he or she needs, he or she cannot simply undo the excessive space and get his or her money back. But in the long run, when the coops need to be replaced, he or she can choose among new coops of different sizes.Thus, in the long run, a firm will select the plant size that is most economical for the output level it expects to produce.
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In which of these markets would the firms be facing the least elastic demand curve?
A) perfect competition B) pure monopoly C) monopolistic competition D) oligopoly
Senator DuMonde favors a government program that he believes will help save endangered species. Economic analysis indicates that
a. because Senator DuMonde has good intentions, his new program will have the desired results. b. Senator DuMonde's new program could have unintended consequences that might result in an outcome different from what was intended. c. regardless of any secondary effects, costs should not be considered when designing environmental legislation. d. because Senator DuMonde's proposal is a government program, it will not have an opportunity cost.
An operational lag is the time taken by policymakers to recognize the existence of an economic expansion or recession
a. True b. False Indicate whether the statement is true or false
Which of the following is NOT a potential problem of using export controls?
A) There is an incentive for other countries to develop production of their own. B) Domestic producers may have less incentive to increase output. C) Prices go up in the country imposing the controls. D) There is more incentive for smuggling.