Explain why a firm's long-run total cost is no greater than its short-run total cost. Under what circumstances will the two be equal?
What will be an ideal response?
A firm has more flexibility in the long run than in the short run, because fixed inputs limit the adjustments that a firm can make in the short run. To produce a given output level, the firm must work with the available capital in the short run, which may not be the amount of capital needed to produce that output at the lowest cost. In this case, the short-run total cost will be higher than the long-run cost which is incurred when there is sufficient time to adjust the amount of capital to its desired level. The short-run cost could equal the long-run cost, however, if the fixed amount of capital available in the short run just happens to equal the amount of capital desired in the long run.
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A. Highly-skilled immigrants B. Low-skilled immigrants C. Highly-skilled domestic workers D. Low-skilled domestic workers
The four distinct tools of policy used by the Fed to influence the money supply are
A) interest rates, government spending, tax rates, and government transfer payments. B) open market operations, discount policy, reserve requirement policy, and adjusting interest on reserves. C) open market operations, adjusting the exchange rate of the dollar, government purchases, and reserve requirement policy. D) reserve requirement policy, discount policy, interest rates, and tax rates.
In Figure 17-4 above, the profit-maximizing quantity, in the absence of "menu costs," ________, with profit equal to ________
A) remains Y0, J + K B) remains Y0, H + K C) remains Y0, G + H + J + K D) falls to Y1, G + J E) falls to Y1, F + G + J
To optimally deter crime, law enforcement authorities should:
A) set higher fines for crimes that have a lower probability of being caught. B) set the fine equal to the expected benefit, even if it is difficult to catch the offenders. C) ignore the probabilities of catching offenders and attempt to prevent crime at all costs. D) set very high fines regardless of the probability that an offender is caught.