Economists consider which of the following costs to be irrelevant to a short-run business decision?
A) opportunity cost
B) out-of-pocket cost
C) historical cost
D) replacement cost
C
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As output increases
A) the difference between average total cost and average variable cost decreases. B) marginal cost increases continuously. C) average variable cost becomes smaller and smaller. D) the difference between average total cost and average variable cost becomes greater and greater.
Many economists maintain that
a. the aggregate supply curve is nearly horizontal at low levels of real GDP. b. the aggregate supply curve is nearly vertical at very high levels of real GDP. c. any change in aggregate demand will have most of its effect on output when economic activity is low but on prices when the economy is near full employment. d. All of the above are correct.
Total revenue will be at its largest value on a linear demand curve at the
a. top of the curve, where prices are highest. b. midpoint of the curve. c. low end of the curve, where quantity demanded is highest. d. None of the above is correct.
Zero inflation
a. might be dangerous because it could lead to rapidly increasing prices. b. would limit the flexibility of the labor market and so could at times raise unemployment. c. would make it easy for the Central bank to create negative real interest rates. d. is impossible to achieve in the real world.