Returns to scale is a ______ concept because ______.
A. short-run; it's related to the law of diminishing marginal returns
B. short-run; it deals with varying the level of one input while holding other inputs constant
C. long-run; a firm can change its output level only in the long run
D. long-run; it refers to changes in all of the firm's inputs
D. long-run; it refers to changes in all of the firm's inputs
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If a reform of the tax laws encourages greater saving, the result would be
a. higher interest rates and greater investment. b. higher interest rates and less investment. c. lower interest rates and greater investment. d. lower interest rate and less investment.
What happens when network externalities are present?
a. The usefulness of telecommunications equipment rises. b. The usefulness of networks diminishes with the number of consumers who enter them. c. The usefulness of a product increases with the number of consumers who use it. d. The usefulness of a product decreases as the number of products rises.
A person starts practicing poisonous snake charming after signing a contract with a health insurance company. This is an example of
A) moral hazard. B) adverse selection. C) signaling. D) screening.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline