Related to the Economics in Practice on page 198: If the long-run average cost curve in an industry has a long, flat section, which of the following must be true?
A. Existing firms have no incentive to expand.
B. There is no single point on the curve that is the best.
C. There would be no difference between the industry's short-run average cost curve and its long-run average cost curve.
D. Small firms have higher average costs than large firms.
Answer: B
You might also like to view...
U.S. citizens migrating to Illinois in the first half of the 19th century would most likely have come from:
a. Massachusetts and New Jersey. b. California and Oregon. c. North and South Carolina. d. Up the Mississippi River from Louisiana and Mississippi.
Nominal gross domestic product is based on:
a. the existing prices at which final goods and services are actually sold. b. prices of final goods and services adjusted for inflation. c. prices at which intermediate goods are sold. d. none of these.
The government wishes to close an inflationary gap by reducing real GDP by $400 billion. Assuming a tax multiplier of 4 and an income multiplier of 5, which of the following policy prescriptions would reduce the inflationary gap by $400 billion?
a. Decreasing government spending by $400 billion and increasing taxes by $400 billion. b. Decreasing government spending by $160 billion and decreasing taxes by $100 billion. c. Decreasing government spending by $40 billion and decreasing taxes by $40 billion. d. Decreasing government spending by $80 billion and keeping taxes the same. e. Doing absolutely nothing to the economy.
When a government subsidy is granted to the sellers of a product, buyers can end up capturing some of the benefit because
a. the market price of the product will fall in response to the subsidy. b. the market price of the product will rise in response to the subsidy. c. the market price of the product will not change in response to the subsidy. d. producers will reduce the supply of the product.