If marginal cost is between average variable cost and average total cost, then
A. both average variable cost and average total cost are decreasing.
B. both average variable cost and average total cost are increasing.
C. average variable cost is decreasing and average total cost is increasing.
D. average variable cost is increasing and average total cost is decreasing.
Answer: D
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The economy's self-correcting mechanism is such that demand shocks are offset in the long run by shifts of aggregate supply and supply shocks are offset by shifts of aggregate demand
a. True b. False
A perfectly competitive firm's long-run supply curve is that part of its MC curve that lies above the point where MC = AVC
Indicate whether the statement is true or false
Collusive control over price may permit oligopolists to:
A. use new technology, achieve economies of scale, and get government subsidies. B. achieve economies of scale, reduce costs, and prevent price cheating. C. reduce uncertainty, increase profits, and possibly limit entry of new firms. D. increase product demand, increase product supply, and lower cost.
In the expansion phase of a business cycle:
A. the inflation rate and productive capacity decrease. B. the inflation rate decreases, but productive capacity increases. C. employment and output increase. D. employment increases, but output decreases.