The rational expectations hypothesis implies that use of discretionary macro-policy as a stabilization tool will
a. be ineffective, even in the short run.
b. be effective in the short run but ineffective in the long run.
c. be effective both in the short run and long run.
d. make it possible to trade-off a higher rate of inflation for a lower rate of unemployment.
A
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If the total cost incurred in hiring ten workers by a firm is $45, and the total cost incurred when the eleventh worker is hired is $60, the marginal cost of hiring the eleventh worker is:
A) $20. B) $15. C) $105. D) $1.33.
In the figure above, if pizza production increases to 15,000 pizzas a day, the deadweight loss is
A) $45,000 per day. B) $12,500 per day. C) $22,500 per day. D) $90,000 per day. E) zero.
If a U.S. firm produces cars in Mexico, that production should count towards
A) Mexico's GNP. B) U.S. GDP. C) U.S. GNP. D) It will not affect either U.S. GNP or U.S. GDP.
It has been argued that a monopolistically competitive industry involves "waste" because
A) there is too much product differentiation making shelves too crowded. B) they end up producing to the right of the minimum of the average total cost curve and the price is below the marginal cost. C) the firms do not equate marginal cost to marginal revenue to find the profit maximizing price and output. D) the firms do not produce at the minimum of the average total cost curve and price is above marginal cost.