In the short run average costs eventually increase because of ________, and in the long run average costs eventually increase because of ________.
A. diminishing returns; diseconomies of scale
B. diseconomies of scale; diminishing returns
C. increasing returns to scale; diseconomies of scale
D. constant returns to scale; decreasing returns to scale
Answer: A
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The noise inflicted on bystanders by users of chain saws, lawn mowers, and motorcycles is an example of
a. a positive externality b. a public good c. nonexcludability d. marginal private benefit exceeding marginal social benefit e. marginal social cost and the free-rider problem
Which of the following is a cost of inflation?
a. shoeleather costs b. menu costs c. relative price variability d. All of the above are correct.
According to the theory of purchasing power parity, why should identical goods have the same price in different locations?
a. To prevent price gouging, international law mandates that identical goods must be sold for the same currency-adjusted price across all locations. b. If the goods were two different prices, it would cause an increase in supply of the good at the low-price location and a decrease in supply of the good at the high-price location, which would cause the prices in each location to converge to the same price. c. If the goods were two different prices, it would cause an increase in supply of the good at the high-price location and a decrease in supply of the good at the low-price location, which would cause the prices in each location to converge to the same price. d. If the goods were two different prices, it would cause a decrease in demand of the good at the low-price location and an increase in demand of the good at the high-price location, which would cause the prices in each location to converge to the same price.| e. If the good were two different prices, it would cause an increase in demand of the good solely at the low-price location until that good reached the sameprice as the good in the high-price location.
In strategic trade bargaining it is sometimes reasonable to be unreasonable.
Answer the following statement true (T) or false (F)