The ABC Corporation decreases all of its inputs by 12 percent and finds that its output falls by only 8 percent. This means that initially it was producing:
A. in the range of economies of scale.
B. in the range of diseconomies of scale.
C. at the point of minimum efficient scale.
D. where AP is less than MP.
Answer: B
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A larger labor force will allow the economy to produce more total output
Indicate whether the statement is true or false
Donuts and coffee are complements. When the price of a donut increases, the demand for coffee ________ and the cross elasticity of demand for coffee with respect to the price of a donut is ________
A) decreases; negative B) increases; negative C) increases; positive D) decreases; positive
The "new product bias" in the consumer price index refers to the idea that
A) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers. B) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers. C) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers. D) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers.
According to the neoclassical growth model, if a country makes a policy change to increase its savings rate, in the new steady state:
a. output per worker will grow faster than before. b. output per worker will grow at the rate of technology growth. c. capital per worker will be permanently higher. d. all of the above.