In the Wealth of Nations, Adam Smith argues that:
A. self-interest leads to the efficient allocation of resources.
B. profits are maximized where marginal revenue equals net marginal benefits.
C. benevolence leads to the efficient allocation of resources.
D. None of the statements associated with this question are correct.
Answer: A
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What factors of production can a firm change in the short run? In the long run?
What will be an ideal response?
In the short run, when the prevailing market price falls below the average variable cost curve, a firm in perfect competition will shut down because: a. economic profit is zero
b. price is less than marginal revenue. c. marginal revenue is insufficient to pay average variable cost. d. other firms will enter the market seeking profits.
The total U.S. productivity growth rate decreased during the 1990s due to massive technological innovations
a. True b. False Indicate whether the statement is true or false
Automatic stabilizers stabilize the level of real GDP because:
A. Congress quickly passes laws that change spending and tax revenue. B. federal expenditures and tax revenues change as the level of real GDP changes. C. the spending and tax multiplier are constant. D. wages are controlled by the minimum wage law.