Suppose Heidi's Ice Cream experiences economies of scale up to a certain point and diseconomies of scale beyond that point. Its long-run average cost curve is most likely to be
A. U-shaped.
B. downward sloping to the right.
C. upward sloping to the right.
D. horizontal.
Answer: A
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“The hotter it gets, the more water people drink.” This statement implies that the relationship between temperature and water consumption must have a
A. negative slope. B. positive slope. C. slope always equal to one. D. slope always equal to 45 degrees.
Use the following graph showing the domestic demand and supply curves for a specific product in a hypothetical nation called Marketopia to answer the next question.
If the world price for this product is $2.00, then Marketopia will
A. import 200 units. B. import 400 units. C. export 200 units. D. export 400 units.
Given the current structure of the Social Security and Medicare programs, the retirement of the baby boom generation during the years following 2012 will be most likely to
a. reduce government expenditures on health care and income transfers. b. increase government expenditures on health care and income transfers. c. result in large budget surpluses. d. result in lower tax rates.
A major contributing factor to the instability of money demand over the past 25 years is the:
A. introduction of credit cards. B. introduction of financial instruments that pay higher returns than money but can be used as a means of payment. C. Fed has changed the way the money aggregates are defined. D. failure of many savings and loans.