If average fixed cost exceeds average variable cost, a firm should shut down in the short run
a. True
b. False
B
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National output and national income are essentially the same because
A) every purchase implies a sale. B) every cost implies a benefit. C) every profit implies a loss. D) every gain implies a sacrifice.
The Phillips curve shows
A) a positive relationship in the long run between the rate of inflation and the rate of unemployment. B) a negative relationship between the inflation rate and the unemployment rate, at least in the short run. C) a positive relationship between contractionary monetary policy and higher price levels. D) a positive relationship between price stability and constant, small-increment changes in the fiscal policy on the part of the Fed.
In a perfectly contestable market in the long run, each firm
A. produces at the minimum point on its long-run average total cost curve. B. earns a profit below its opportunity cost of capital. C. avoids making capital expenditures. D. All of the responses are correct.
Refer to Figure 6.1. Assume that L1 represents the budget line before a price change. The income effect is shown by the movement:
A. from bundle A to bundle C.
B. from bundle A to bundle B.
C. from bundle B to bundle C.
D. from bundle C to bundle B.