Economies of scale can
A) result in an increasing cost industry.
B) cause input prices to drop.
C) prevent the entry of new firms into a market.
D) reduce the rate of return which the firm may earn.
C
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When a $10 check written on the First National Bank of Chicago is deposited in an account at Citibank, then
A) the liabilities of the First National Bank increase by $10. B) the reserves of the First National Bank increase by $ 10. C) the liabilities of Citibank increase by $10. D) the assets of Citibank fall by $10.
Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below.ProcessABCDE(smoke/day)(4 tons/day)(3 tons/day)(2 tons/day)(1 tons/day)(0 tons/day)Cost to Acme ($/day)$750$800$1,000$1,400$2,000Cost to FirmCo ($/day)$500$750$1,200$2,200$4,000 Suppose the firms are both currently using process A. If the government imposes a tax of $110 per ton of smoke emitted, then Acme will use process ________, and FirmCo will use process ________.
A. D; C B. C; A C. B; A D. C; C
The marginal revenue that would be derived from producing a fourth unit of output is
A. $30.
B. $24.
C. $21.
D. $12.
Based on the diagram, if potential output equals 8,000 and the real interest rate is 4 percent, then there is ________ gap and the Fed must ________ the real interest rate so that output will equal potential output. 
A. a recessionary; lower B. no output; not change C. a recessionary; raise D. an expansionary; raise