The underlying reason why trade benefits both sides of a trading arrangement is rooted in the concept of _____
a. opportunity cost
b. sunk cost
c. diseconomies of scale
d. constant returns to scale
a
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Consider the demand curves for soft drinks shown in the figure above. A movement from point a to point b represents
A) a decrease in quantity demanded. B) an increase in demand. C) an increase in quantity demanded. D) a decrease in demand.
Picture an economy that is in general equilibrium. What would happen if the natural rate of unemployment were to experience an increase?
A) according to the Phillips curve, the ensuing negative unemployment gap would exert inflationary pressures B) according to Okun's Law, the ensuing negative unemployment gap would be consistent with a positive output gap C) according to the AD-AS framework, the LRAS curve would shift to the left and the ensuing positive output gap would be closed by subsequent leftward shifts in the AS curve to higher equilibrium levels of inflation D) all of the above E) none of the above
Explain the reason behind the declining gap between average cost (AC) and average variable cost (AVC) curves at higher levels of output
If a firm is earning a negative economic profit, it means that:
A. the resources should not be invested in other business opportunities. B. the opportunity cost is smaller than what the firm is earning. C. more profits could be earned with the same resources in another industry. D. it must be earning negative accounting profit.