Explain how the long-run average cost curve is constructed graphically
What will be an ideal response?
The long-run average cost curve is constructed as the envelope to (a curve tangent to) all the possible short-run average cost curves that correspond to different plant sizes.
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A decrease in the nominal interest rate ________ the opportunity cost of holding money
A) increases B) decreases C) can increase or decrease D) None of the above answers is correct because the nominal interest rate does not affect the opportunity cost of holding money.
In Figure 3-7 above, if natural real GDP = $2500, AP = $250, and the change in "a" = change in I = change in NX = 0, the tax cut required to achieve then natural real GDP is
A) $312.50. B) $250.00. C) $500.00. D) none of the above.
The OLS estimator
A) has the multivariate normal asymptotic distribution in large samples. B) is t-distributed. C) has the multivariate normal distribution regardless of the sample size. D) is F-distributed.
When the Gizmo Company could sell a gizmo for $10, it produced 2,500 per month. More recently, the price of a gizmo has fallen to $9 and so Gizmo is only producing 2,000 units per month. What is the price elasticity of supply for gizmos?
A) 0.47 B) -0.47 C) -2.11 D) 2.11