"Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at the lowest point on the long-run average cost curve." True or false?
Indicate whether the statement is true or false
False. The optimal point in the long run depends on the demand for the firm's product. If demand is small, the firm will prefer a relatively small plant and will operate to the left of minimum LRAC. A firm anticipating a large demand may find it optimal to produce beyond minimum LRAC. Later, there will be a tendency to operate at minimum LRAC when a firm faces competition, but there is no such discipline on the firm in this chapter.
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Based on the figure above, in which quarter or quarters did a trough occur?
A) between 2013, 2nd quarter to 2014, 2nd quarter B) between 2012, 2nd quarter to 2013, 2nd quarter and also between 2014, 2nd quarter to the end of the figure C) in 2013, 2nd quarter D) in 2014, 2nd quarter E) There are no troughs illustrated in the figure.
When the short run aggregate supply curve shifts left, it ___ the short-run Phillips curve
a. Moves the economy up along b. Moves the economy down along c. Shifts right d. Shifts left
If there is surplus of loanable funds, then
a. the supply for loanable funds shifts right and the demand shifts left. b. the supply for loanable funds shifts left and the demand shifts right. c. neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium. d. neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium.
Why was so much of the "boom" of the 2000s concentrated in the housing and real estate sectors?
A) The Fed attempted to engineer an increase not only in real GDP, but in particular further the expansion of those sectors. B) The Community Reinvestment Act (CRA) called for banks to offer subprime loans to at-risk customers. C) People were encouraged to "flip" houses because the low interest and rate and easy lending practices made it appear profitable to do so. D) For all of the above reasons.