All of the following statements are true of the minimum efficient scale except one. Which one?
A) All possible economies of scale have been exhausted.
B) The short-run average total cost curve's minimum point is equal to the long-run average cost curve's minimum point.
C) Any increase in the scale of operation will encounter either constant returns to scale or diseconomies of scale.
D) An increase in the output level will increase profit.
Answer: D
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Which of the following is false?
A. The completion of the national railroad network by 1890 led to the development of a national American market rather than just a series of smaller regional markets. B. Before the Civil War the North and the South were in agreement on the issue of protective tariffs, but were in conflict over the spread of slavery into the new Western territories. C. The U.S. was the first mass-consumption society. D. From 1900 to the end of World War I, U.S. farmers prospered.
If the price of a good increases, ________
A) the budget constraint shifts to the right B) the budget constraint shifts to the left C) the consumer surplus increases D) the consumer surplus decreases
What can account for the negative slope of the marginal revenue product curve?
A) Diminishing marginal utility B) Diminishing marginal returns C) Monopsony power D) All workers eventually begin slacking. E) none of the above
Suppose Reta is planning for retirement in a two-period world. In the first period Reta is young and earns $1 million, and in the second period Reta is old and retired and earns nothing. The interest rate is initially 10 percent, but then it falls to 7 percent. After the interest rate falls, the
a. substitution effect will induce Reta to consume more when she is young. b. substitution effect will induce Reta to consume less when she is young. c. income effect will induce Reta to consume more when she is young. d. change in interest rates affects the substitution effect but not the income effect.