Production costs for a given output will be minimized when the
A. budget line and the product indifference curve meet in the vertical axis.
B. budget line crosses the product indifference curve.
C. budget line begins to bend back on itself.
D. product indifference curve and the budget line are tangent.
Answer: D
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If the production possibilities curve is a straight line,
A. opportunity costs rise as output of either commodity is expanded. B. resources are not equally productive in the production of both goods. C. opportunity costs are negative. D. resources can be moved from the production of one good to production of others with no loss of productivity.
The ________ is the average hourly wage rate measured in current dollars, while the ________ is the average hourly rate measured in the dollars of a given reference base year
A) real interest rate; nominal interest rate B) nominal wage rate; real wage rate C) real wage rate; nominal wage rate D) nominal interest rate; real interest rate E) inflation rate; real wage rate
An increase in the expected rate of inflation is most likely to cause an increase in ________
A) the ex post real interest rate B) the ex ante real interest rate C) the nominal interest rate D) the expected real interest rate E) none of the above
In a competitive industry buffeted by demand supply shocks, prices increase and decrease, but economic profits tend to revert to zero. Hence, profits are exhibiting
a. Above-average return b. Positive earnings c. Mean reversion d. None of the above