In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices.
B. lower prices.
C. lower output.
D. None of these is true.
Answer: D
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Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel's and Mia's hourly productivity are shown in Table 3.3. Mia's opportunity cost of producing one hair pin is
A) 1/3 of a bandana. B) 2.5 bandanas. C) 3 bandanas. D) 10 bandanas.
Hyperinflation is
A) inflation caused by negative growth in the quantity of money. B) inflation at a rate that exceeds 5 percent a month. C) only theoretical and has never occurred in the real world. D) inflation caused by excessive growth in the demand for money. E) inflation at a rate that exceeds 50 percent a month.
The total variable cost curve ________ because ________ as output increases
A) slopes upward; variable cost increases B) slopes upward; marginal cost increases C) slopes downward; variable cost increases D) slopes downward; marginal cost increases E) is horizontal; fixed cost does not change
Banks hold capital because
A) they are required to by regulatory authorities. B) higher capital increases the returns to the owners. C) it increases the likelihood of bankruptcy. D) higher capital increases the return on equity.