A temporary decrease in the price of oil would be considered a:
A. long-run supply shock.
B. demand shock.
C. short-run supply shock.
D. The changing price of oil would not affect any of these.
Answer: C
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A bank's reserves
A) can be held as deposits with the Federal Reserve. B) are the sum of its excess and required reserves. C) can be held as cash in its vault. D) all of the above.
When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease. B. prices, causing them to definitely rise. C. output, causing it to definitely increase. D. prices, causing them to definitely fall.
A grower faces a price of $0.13/pound for his/her pumpkins. The buyers of the pumpkins will buy as many pumpkins as offered by the grower at this price. The pumpkin farmer evaluates his/her costs and finds that his/her production costs (average total costs) are $0.16 per pound. He/she also evaluates the marginal cost of production and finds that the marginal cost of production at the current level of production is $0.14 per pound. The average variable cost of production at the current level is $0.12 per pound. In the short run, the producer should try to:
a. Increase amount produced to get maximum profit b. Decrease the amount produced to get maximum profit c. Leave unchanged the amount produced to get maximum profit d. Stop producing and let the pumpkins rot
Diseconomies of scale mean that:
A. the advantages of specialization are being more fully realized. B. a firm's long-run average total cost curve is rising. C. a firm's long-run average total cost curve is declining. D. a given increase in inputs results in a more-than-proportionate increase in output.