A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock.
B. long-run demand shock.
C. long-run supply shock.
D. short-run demand shock.
Answer: A
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In order to get his bachelor's degree, Timothy gave up an offer for a full time job as a bartender. Therefore, Timothy incurred an opportunity cost
Indicate whether the statement is true or false
Expansionary monetary policy will have what effect on the components of aggregate demand?
A) Consumption, investment, and net exports will rise. B) Consumption will rise, but investment and net exports will fall. C) Consumption and investment will rise, but net exports will fall. D) Consumption will fall, but investment and net exports will rise.
When price is less than average variable cost at the profit-maximizing level of output, a firm should:
A) continue to produce the level of output at which marginal revenue equals marginal cost if it is operating in the short run. B) continue to produce the level of output at which marginal revenue equals marginal cost if it is operating in the long run. C) shutdown, because it will lose nothing in that case. D) shutdown, because it cannot even cover all of its variable costs let alone its fixed costs if it stays in business.
Which of the following will decrease the price needed to break even?
a. A decrease in overall fixed but avoidable costs b. A decrease in the marginal costs c. An increase in sunk costs d. Both A&B