Which of the following statements regarding the relationship between average and marginal costs is INCORRECT?
A. There is no way for average variable costs to fall when marginal costs are falling.
B. When marginal costs are greater than average costs, the latter must rise.
C. When marginal costs are less than average costs, the latter must fall.
D. There is always a definite relationship between average and marginal cost.
Answer: A
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Which of the following is a primary market transaction?
A) Sally Wither purchases 100 shares of IBM through her broker. B) Kold Co. issues 1 million new shares through Morgan Stanley. C) Bob Hill sells 1,000 shares of Disney directly to his friend. D) Kip Peters sells 1,000 shares of Dush, Inc., which he bought in an IPO last month, through his broker.
An increase in the real wage
A) represents a pure substitution effect. B) represents a pure income effect. C) represents a combination of income and substitution effects. D) causes a parallel shift in the consumer's budget line.
Tina withdraws $20,000 from her money market account to start up her own house cleaning business. Over that time, the account would have earned 3 percent interest. In order to properly account for all costs of her business, Tina must not forget:
A. the opportunity cost of $2,600. B. the opportunity cost of $600. C. the fixed cost of $20,600. D. the fixed cost of $20,600 and the opportunity cost of $600.
If there is a "long and variable time lag" between when a change in monetary policy is instituted and when it impacts aggregate demand and output, this will
a. make it easier for the Fed to properly time changes in monetary policy. b. make it more difficult for the Fed to properly time changes in monetary policy. c. not affect the Fed's ability to time monetary policy changes correctly. d. make it easier for the Fed to control inflation and achieve price stability.