A production function of the form Q = 40 L.75 K.20exhibits ________ in the long run.
A. diminishing returns to the variable input
B. decreasing returns to scale
C. increasing returns to scale
D. constant returns to scale
Answer: B
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The attempt to capture consumer surplus, producer surplus, or economic profit is called ________
A) a natural monopoly B) price discrimination C) rent seeking D) gouging
Natural monopolies are usually found in industries with
a. low fixed costs. b. large economies of scale. c. a normal profit. d. constant economies of scale.
The real business cycle model suggests that, with aggregate demand unchanged, increases in output would be associated with ________
A) an increase in inflation B) a decline in inflation C) and unchanged price level D) procyclical inflation
Over time, the Phillips curve has:
a. remained stable. b. shifted downward. c. shifted upward. d. has become positively sloped.