In the equation GDP = C + I + G + F, in which F equals net export spending (i.e., total spending on exports minus total spending on imports), imports are subtracted from the other types of expenditures because:
A) imports reduce national welfare.
B) other countries do not import goods from the U.S.
C) it represents a flow of expenditures out of the domestic economy to the rest of the world.
D) the value of imports is difficult to determine due to the fact that they are frequently stated in terms of foreign currency.
C
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In monopolistic competition, barriers to entry give the firms the power to set their price
Indicate whether the statement is true or false
For a particular competitive firm, the minimum value of average variable cost (AVC) is $12 and is reached when 200 units of output are produced. For the same firm, the minimum value of average total cost (ATC) is $15 and is reached when 230 units of output are produced. Which of the following statements is correct?
a. In the short run, the firm will shut down if the price of its product is $11. b. In the long run, the firm will shut down if the price of its product is $14. c. If the price of its product is $12, then the firm's loss if it produces 200 units of output is the same as its loss if it shuts down. d. All of the above are correct.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Which of the following cost functions exhibits economies of scope over the specified output range?
A. C(Q1, Q2) = 10 + 0.5Q1Q2 + (Q1)2 + (Q2)2, for all Q1 < 3 and Q2 < 3. B. C(Q1, Q2) = 10 + 0.5Q1Q2 + (Q1)2 + (Q2)2, for all Q1 > 2 and Q2 > 2. C. C(Q1, Q2) = 10 + 3Q1Q2 +(Q1)2 + (Q2)2, for all Q1 > 4 and Q2 > 4. D. C(Q1, Q2) = 10 + 3Q1Q2 + (Q1)2 + (Q2)2, for all Q1 > 0 and Q2 > 0.