A decrease in the price of spaghetti noodles is likely to cause:
A. an increase in the demand for penne pasta due to a change in the price of a complementary good.
B. a decrease in the demand for penne pasta due to a change in the price of a complementary good.
C. a decrease in the demand for penne pasta due to a change in the price of a substitute good.
D. an increase in the demand for penne pasta due to a change in the price of a substitute good.
Answer: C
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If a firm shuts down in the short run, it will:
a. incur losses equal to its fixed costs. b. produce at the output level where MC = MR. c. reduce its losses to zero. d. do this because P > AVC. e. have total revenue greater than total fixed costs.
When positive externalities are present, it means that:
A. individuals don't take into account all the benefits associated with their market choice. B. society bears part of the cost borne of private transactions. C. individuals consume more than the social optimum. D. All of these statements are true.
Which of the following schools of thought believes that wages and prices are rigid in the short run?
a. Keynesians and new Keynesians b. Only monetarists c. Only new classical economists d. Monetarists and new classical economists e. Monetarists and Keynesians
In the short run, a firm will eventually experience rising average total costs because of
a. economies of scale. b. diseconomies of scale. c. the law of supply. d. the law of diminishing returns.