If an increase in output is proportionately smaller than the increase in inputs, this is best described as;
(a) Decreasing returns to scale.
(b) Increasing returns to scale.
(c) Constant returns to scale.
(d) Marginal returns to scale.
Answer: (a) Decreasing returns to scale.
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Answer the following statement(s) true (T) or false (F)
1. If the demand curve for a good is relatively flat, a small change in price results in a relatively large change in quantity demanded 2. If safer cars reduce a driver's chance of dying in an accident, then there will be fewer driver fatalities. 3. If one wants to apply the theoretical side of economics by examining data, they use a family of statistical techniques called econometrics. 4. A sales tax causes the demand curve to shift upwards by the amount of the tax. 5. As defined by economists, the supply of corn refers to the number of bushels of corn that farmers bring to the market.
Other things being equal, a rise in a country's terms of trade increases its welfare. What would happen if we relax the ceteris paribus assumption, and allow for the law of demand to operate internationally?
What will be an ideal response?
The principle of specialization and exchange implies that
a. total production is highest when individuals specialize according to their absolute advantages b. productive inefficiency increases as producers in society specialize c. exchange can only occur when there is specialization in the economy d. gains from specialization will only occur when society is operating at a point along its production possibilities frontier e. total production is highest when individuals specialize according to their comparative advantages
If you believe that the economy can achieve full employment without inflation through tax reductions, spending cuts, and deregulation, you are a member in good standing in the
a. classical school b. Keynesian school c. neo-Keynesian school d. rational expectations school e. supply-side school