In general, when the price of a fixed factor of production increases:
A. the profit-maximizing level of output increases.
B. the profit-maximizing price falls.
C. marginal cost increases.
D. marginal cost is unchanged.
Answer: D
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Mean reversion refers to the fact that
A) small firms have higher than average returns. B) stocks that have had low returns in the past are more likely to do well in the future. C) stock returns are high during the month of January. D) stock prices fluctuate more than is justified by fundamentals.
During a severe and persistent recession, Keynesians would most likely propose
A) tax increases. B) a tight money policy. C) annually balanced federal budgets. D) macroeconomic stabilization.
If the marginal propensity to consume (MPC) is 0.90, a $100 increase in investment spending, other things being equal, will cause an increase in equilibrium real GDP of:
a. $90. b. $100. c. $900. d. $1,000.
The main reason economists are concerned about the problem of idle or unemployed resources is that: a. high rates of crime are related to high rates of unemployment
b. high rates of inflation are caused by idle land, labor, and capital resources. c. government benefits paid to unemployed workers put stress on the federal budget. d. unemployed resources mean less production and a lower standard of living for the nation.