With the policy rate set at zero, the rise in expected inflation will lead to a ________ in the real interest rate, which will cause investment spending and aggregate output to ________
A) fall; rise
B) fall; fall
C) rise; rise
D) rise; fall
A
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At the quantity of 200 bushels of apples, the marginal social benefit of a bushel of apples is $100 and the marginal social cost is $50. To produce the efficient quantity of apples
A) more apples should be produced. B) fewer apples should be produced. C) there should be no change in the amount of apples produced. D) More information on the willingness of consumers to purchase apples is needed to determine the efficient level of apples.
If a firm experiences economies of scope, per unit production costs fall as it produces more than one kind of product
a. True b. False
Suppose Fernando allocates his lunch money to pizza and Coke. A Coke costs $1 and a slice of pizza costs $1.50 . The marginal utility of the last slice of pizza Fernando ate was 30, and the marginal utility of his last Coke was 25 . Fernando spent all of his lunch money. From this information, we can conclude that
a. Fernando allocated his money in a way that maximized his total utility b. Fernando's total utility would have been higher if he had purchased more Coke and less pizza c. Fernando's total utility would have been higher if he had purchased more pizza and less Coke d. Fernando could have increased his total utility by purchasing more Coke but the same quantity of pizza e. Fernando could have increased his total utility by purchasing more pizza but the same quantity of Coke
If a monopolistically competitive firm is earning economic profits in the short run:
A. its output will increase in the long run. B. these profits will persist in the long run because of the firm's limited monopoly power. C. price will be driven down to minimum average total cost in the long run. D. these profits will be eliminated in the long run as new firms enter the industry.