A firm's long run cost is the cost of production when the firm
A) calculates its cost at least one year into the future.
B) adds together all of its short run costs.
C) uses the economically efficient quantities for its plant and its labor.
D) can vary the amount of output it produces.
C
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Suppose the government levies a per-unit tax on TVs, and this tax increases the price of TVs by $10. a. On a graph with TVs on the horizontal axis and "$'s of other consumption" on the vertical, illustrate how the budget constraint for a consumer with exogenous income changes as a result of the tax. b. Suppose you know the bundle on the after-tax budget that is chosen by the consumer. Illustrate on your graph how much in tax revenue the government is raising from this consumer. c. If the government replaced the tax on TVs with a lump sum tax that does not alter any prices but raises the same amount of revenue from the consumer, how would this consumer's budget constraint change?
What will be an ideal response?
Suppose a British bank offers a 3 percent interest rate while a U.S. bank offers a 7 percent interest rate. People must expect the U.S. dollar will
A) depreciate 4 percent. B) appreciate 4 percent. C) appreciate 10 percent. D) depreciate 10 percent.
In the aggregate demand-aggregate supply framework, how does an increase in the price level affect potential GDP?
What will be an ideal response?
What is the difference between the long-run aggregate supply and the short-run aggregate supply curves?
What will be an ideal response?