There are several conditions that justify limiting imports to ensure the survival of the "infant industry," and to justify government protection. Which of the following is(are) a justification?
I. Knowledge spillovers should be likely.
II. Protected firms should have a good chance of moving down along their average cost curves over time to become competitive at world prices.
III. Protected firms should have a good chance to reduce future costs and cause their average cost curves to shift downwards.
a. I
b. II
c. I and III
d. I, II, and III
Ans: c. I and III
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Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.
Suppose the production of cotton causes substantial environmental damage because the pesticides used by cotton farmers often make their way into nearby rivers and streams, and are very harmful to fish and other wildlife. Economists would consider the environmental damage that results from the production of cotton to be a(n):
A. relevant cost of production only if the environmental damage negatively affects other firms. B. relevant cost of production only if cotton farmers are charged a fine for the damage done. C. relevant cost of production. D. implicit cost of production that cotton farmers will take into account when determining their profit-maximizing level of output.
Total cost is
A) \TFC - TVC. B) TFC/TVC. C) TFC + TVC. D) AFC + AVC.
In the graph showing an increase in aggregate demand, a drop of 3 percentage points in unemployment corresponds with ______.
a. a decrease in aggregate demand
b. a price level increase of 4
c. an increase in RGDP of $4 trillion
d. a decrease in RGDP of $19 trillion