Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the centrist Democrat suggests an increase to infrastructure spending. Suppose the centrist Republican suggests an increase in cyber-defense spending. The Democrat says that the extra infrastructure spending will decrease travel times and be the most valuable. The Republican is arguing that, on average, cyber-security is worth the money, so more is better. What is going on here?
A. Neither are using marginal analysis.
B. Only the Democrat is using marginal analysis.
C. Only the Republican is using marginal analysis.
D. Both are employing marginal analysis, just from different perspectives.
Answer: B
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If average cost is positive
A) marginal cost equals average cost. B) marginal cost exceeds average cost. C) marginal cost is less average cost. D) Not enough information is given.
In the ________, each firm treats the output of its competitor as fixed and then decides how much to produce
A) Cournot model B) model of monopolistic competition C) Stackelberg model D) kinked-demand model E) none of the above
By dividing the value of total domestic output (real Gross Domestic Product (GDP)) by the number of workers, economists derive
A) the net domestic product. B) labor productivity. C) the size of the labor force. D) the rate of capital accumulation.
Althea, a brilliant new Ph.D. in economics, has turned down many job offers because she hopes eventually to teach at one of the top 10 universities in her field. The type of unemployment she is experiencing is:
a. frictional. b. structural. c. seasonal. d. cyclical. e. underemployment.