When a firm is experiencing economies of scale, long-run
a. average total cost is minimized.
b. average total cost is greater than long-run marginal cost.
c. average total cost is less than long-run marginal cost.
d. marginal cost is minimized.
b
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An agricultural economist reports that corn prices are very high this year and that corn growers are earning substantial profits. He concludes that government action is needed to direct more farmers to grow corn. Is such action necessary? Why or why not?
Many believe that fairness calls for higher income taxes on the wealthy. Using one of the “Ideas for Beyond the Final Exam,” explain how higher taxes on the wealthy will affect output.
What will be an ideal response?
Marketable pollution rights _____
a. make producers pay for polluting b. are inherently wrong c. give producers incentive to internalize external costs d. do nothing to reduce pollution in the long run
An open-market purchase of T-bonds by the Fed causes the money supply to
A. fall and bond prices to fall. B. rise and bond prices to fall. C. rise and bond prices to rise. D. fall and bond prices to rise.