Refer to the diagram. Assume both upward and downward price and wage flexibility in the economy. In the extended AD-AS model:
A. demand-pull inflation would involve a rightward shift of curve A, followed by a rightward
shift of curve C.
B. cost-push inflation would involve a leftward shift of curve C, followed by an upward shift of
curve B.
C. recession would involve a leftward shift of curve A.
D. a rightward shift of curve D would be equivalent to an outward shift of the nation's production possibilities curve.
D. a rightward shift of curve D would be equivalent to an outward shift of the nation's production possibilities curve.
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Free trade is ________, because it ________ the size of the pie available to the economy.
A. efficient; decreases B. inefficient; decreases C. inefficient; increases D. efficient; increases
The larger a country is relative to the rest of the world, the less likely it is to be able to produce a net benefit for its citizens by imposing an import tariff.
Answer the following statement true (T) or false (F)
How does marginal cost change as output increases (a) initially and (b) eventually?
What will be an ideal response?
At the minimum efficient scale
A) all possible economies of scale have not been exhausted. B) marginal cost is at its minimum. C) the firm has achieved the lowest possible average cost of production. D) any increases in the scale of operation will encounter further economies of scale.