Exhibit 7-16 Long-run average cost curves
In Exhibit 7-16, which firm's long-run average cost curve experiences constant returns to scale between 2 and 5 units?
A. Firm A.
B. Firm B.
C. Firm C.
D. Firms A and C.
Answer: B
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Open market operations refer to the purchase or sale of ________ by the Federal Reserve in order to influence the money supply
A) U.S. government bonds B) corporate bonds and stocks C) foreign currency D) commodities
The law of diminishing returns occurs because
A) the marginal product of an additional worker is greater than the marginal product of the previous worker. B) the marginal product of a variable input, such as labor, depends in part on the amount of fixed inputs, such as capital. C) total production decreases as more of the variable inputs are used. D) adding more and more workers leads to a decrease in the quantity of capital.
Given that Sandy can produce 10 economics reports or make 2 sales calls and Tim can produce 2 economics reports or make 1 sales call, we can conclude that
A) Sandy should specialize in economics reports, and Tim should specialize in sales calls. B) Sandy should produce both economics reports and sales calls since she cannot possibly gain from trade with Tim. C) Tim should specialize in producing economics reports, and Sandy should specialize in producing sales calls. D) Tim should produce both economics reports and sales calls.
The real rate of interest is
A. the interest rate observed in the market. B. not influenced by inflation. C. the interest rate observed in the market minus the anticipated inflation rate. D. a value that depends upon the stock market.