Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; higher
C. lower; higher
D. higher; potential
Answer: D
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Which of the following will not shift the demand for labor to the right?
A. an increase in the wage rate B. an increase in the demand for output C. an increase in the price of a competing input D. an increase in the competitiveness of an industry
If foreign residents purchase 30 billion pesos of Mexican assets and Mexican residents purchase 25 billion pesos of foreign assets, then Mexico has a net capital outflow of 5 billion pesos
a. True b. False Indicate whether the statement is true or false
A firm in a competitive industry faces a market price for output of $25 and a wage rate of $750. At the current level of employment (50 units of labor), the marginal product of labor is 20. In order to maximize profit, the firm should
A. keep the level of employment the same because the firm is earning a profit of $500. B. hire less labor because the firm is suffering a loss of $12,500. C. hire more labor because hiring another unit of labor would increase profit by $500. D. hire less labor because hiring the last unit of labor decreased profit by 250.
By shutting down, a firm
A) stops receiving revenue but continues to pay variable costs.
B) stops receiving revenue and is stuck with its fixed costs.
C) avoids its sunk costs as well as its variable costs.
D) can avoid paying taxes on its previously earned profits.