Refer to the long-run cost curve for a firm. If the firm produces output Q 1 at an average total cost of ATC 1 , then the firm is:
A. producing the profit-maximizing output but is failing to minimize production costs.
B. incurring X-inefficiency but is realizing all existing economies of scale.
C. incurring X-inefficiency and is failing to realize all existing economies of scale.
D. producing that output with the most efficient combination of inputs and is realizing all
economies of scale.
C. incurring X-inefficiency and is failing to realize all existing economies of scale.
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Most monetarists favor:
a. frequent changes in the growth rate of the money supply to avoid inflation. b. placing the Federal Reserve under the Treasury. c. a steady, gradual shrinkage of the money supply. d. a constant increase in the money supply year after year equal to the potential annual growth rate in real GDP.
An example of government investment in physical capital to increase business productivity is:
A. roadways. B. bridges. C. sewer systems. D. All of these are examples of ways governments can increase productivity.
During a period of high inflation:
A. borrowers are better off because they can pay off their loans with currency that is worth less. B. borrowers are worse off because they have to pay off their loans with currency that is worth more. C. lenders are worse off because they cannot find anyone who wants a loan. D. lenders are worse off because they are repaid with currency that is worth more. E. none of the above.
Which of the following occurs when an economic activity has a spillover benefit on third parties not engaged in the activity?
A) An economic profit B) A positive externality C) A gain in producer surplus D) A gain in consumer surplus