In the long run all costs are variable costs. Why?
What will be an ideal response?
The long run is defined as the time frame over which all resources can be varied. The costs of the variable inputs are the variable costs. Taken together, these definitions imply that in the long run all inputs are variable inputs so all costs are variable costs.
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Which of the following resources is not essential in the production of a typical cheese pizza?
A) Dough B) Sauce C) Heat D) Fodder for cows E) Trick question: all of the above are essential.
A business incurs the following costs per unit: Labor $125/unit; Materials $45/unit and rent $250,000/month. If the firm produces 1,000,000 units a month, the total variable costs equal
a. $125Million b. $45Million c. $1Million d. $170Million
Which of the following would shift the aggregate expenditure line upward?
a. an increase in labor supply b. a decrease in labor demand c. a decrease in government spending d. a decrease in net exports e. an increase in autonomous consumption spending
Which of the following is NOT a negative externality?
A. E-mail "spam" consisting of advertisements for goods and services B. Low-flying aircraft creating noise over an otherwise quiet neighborhood C. A household pet leaving waste on a public sidewalk D. A homeowner failing to remove trash from his yard, leaving it as an unsightly eyesore in the neighborhood