Explain the difference between the short run and the long run.
What will be an ideal response?
The short run is the period of time over which at least one factor of production is fixed. In the long run, firms are flexible to adjust all factors of production, and to enter or exit the industry.
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Consider the production possibilities frontier displayed in the figure shown. If this society chooses to produce 200 bushels of apples it can produce no more than:
A. 20 watermelons.
B. 15 watermelons.
C. 10 watermelons.
D. 5 watermelons.
Which of the following describes the general effect of tariffs on consumer surplus as shown in Exhibit 1?
a. eliminated
b. unchanged
c. decreased
d. increased
The shortfall between tax receipts and government expenditure excluding interest on the national debt is called the
a) structural budget deficit b) current account deficit c) primary deficit d) tax gap e) debt ceiling
If a hurricane were to wipe out the majority of the eastern seaboard in the United States:
A. neither the short-run nor long-run aggregate supply curves would be affected. B. only the long-run aggregate supply curve would shift left. C. only the short-run aggregate supply curve would shift left. D. the long-run and short-run aggregate supply curves would both shift left.