If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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Decreasing marginal returns
A) can be avoided if a firm watches costs. B) affect all firms, but at different production levels. C) affect all firms at the same level of production. D) disappear when the firm produces a large enough level of output. E) mean that the average product of labor starts as a negative number and then becomes positive.
We call costs that fall directly on an economic decision maker:
A. social costs. B. private costs. C. external costs. D. network costs.
The number of cattle slaughtered every year for meat far exceeds the number of elephants slaughtered every year for their ivory. Despite this, cows can be found everywhere while elephants are on the verge of extinction in some countries. Which of the following best explains this difference?
a. Cows can be privately owned while in many countries elephants can not. b. The demand for ivory far exceeds the demand for beef. c. Animals slaughtered for their meat are generally better conserved by humans than animals slaughtered for nonfood uses. d. People tend to protest more every year to prevent cow extinction than they do for elephant extinction.
Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had flexible exchange rates, what effect would these flows have had on Venezuela's overall balance and reserves account?
a. Overall balance would rise and reserves account would fall. b. Overall balance and reserves account would both equal zero. c. Overall balance would fall and reserves account would equal zero. d. Overall balance would equal zero and reserves account would fall. e. Overall balance would fall and reserves account would rise.