Exhibit 7-18 A typical firm in a perfectly competitive market
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In Exhibit 7-18, assume the perfectly competitive firm is in long-run equilibrium and there is an increase in demand. As a result, the firm in the short run will increase output along its:
A. short-run average total cost curve B.
B. short-run marginal cost curve B.
C. long-run average cost curve.
D. none of these because the firm shuts down.
Answer: B
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Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples. The opportunity costs of producing 1 ton of oranges for Alpha and Omega, respectively, are: a. 0.25 tons of apples; 0.5 tons of apples. b. 9 tons of apples; 4 tons of apples
c. 2 tons of apples; 4 tons of apples. d. 0.5 tons of apples; 0.25 tons of apples.
Exhibit 12-1 Business cycle
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In Exhibit 12-1, the recession phase of the business cycle can be represented by point(s):
A. CDE. B. BCD. C. EFG. D. A and E.
In the real business cycle model, fluctuations in employment are explained by ________
A) changes in the composition of household assets B) intertemporal substitution as real wages and real interest rates changes C) changes in the marginal propensity to consume D) the impact of a change in price on quantity demand and quantity supplied in goods markets
When the marginal rate of return expected from a purchase of equipment is less than the market interest rate, then the firm should
a. seek government assistance in decreasing the market interest rate b. inform stockholders that the company can expect increased earnings from the purchase c. either purchase or not purchase the equipment depending on the marginal resource cost of the equipment d. purchase the equipment e. not purchase the equipment