All the factors below are causes of diminishing marginal returns, except
a. Difficulty of monitoring and motivating larger workforces
b. Increasing complexity of larger systems
c. Division of Labor
d. The "fixity' of some factor
c
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Economics is often described as a science of constrained choice. How do you justify this argument?
What will be an ideal response?
Imposition of an output tax on all firms in a competitive industry will result in
A) a downward shift in each firm's marginal cost curve. B) a downward shift in each firm's average cost curve. C) a leftward shift in the market supply curve. D) the entry of new firms into the industry. E) higher profits for the industry as price rises.
The reason the short-run macro model suggests that the economy can operate either above or below its potential while in the long-run classical model the economy operates automatically at full employment is that
a. the short-run macro model is flawed and inaccurate b. the classical model is flawed and inaccurate c. the two models measure completely different aspects of the economy d. in the short run, spending affects output, but not in the long run e. in the short run the role of government in helping the economy return to equilibrium is not considered
Which of the following industries is most likely to exhibit the characteristic of free entry?
a. nuclear power b. municipal water and sewer c. dairy farming d. airport security