Is there a specific amount of time that distinguishes the long run from the short run? Is the amount of time important? Explain
What will be an ideal response?
No. The amount of time will vary by industry. The difference could be months or years. The key point is that in the short run things (number of firms and size of firms) are fixed, but as incentive changes, then in the long run things (number of firms and size of firms) change. What is more important than the specific amount of time is the process of profit and loss incentives that direct resources either to an industry or away from an industry.
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The textbook defines a "large" business as having assets in excess of
A) $50 million. B) $150 million. C) $500 million. D) $1 billion.
According to the long-run Phillips curve, which of the following will be the end result of an expansionary monetary policy when unemployment is at its natural rate?
a. Zero inflation b. Deflation c. A constant level of potential real GDP d. A decrease in unemployment e. An increase in unemployment
Under a system of free, competitive markets,
a. a society can usually achieve efficiency only at the expense of equality. b. poverty cannot exist in the long run. c. employers do not practice statistical discrimination. d. income is distributed equally across the population.
Who gets scarce resources in a market economy?
a. the government b. whoever the government decides gets them c. whoever wants them d. whoever is willing and able to pay the price