Graphically, diseconomies to scale are illustrated by
A) a downward sloping long-run average cost curve.
B) a horizontal long-run average cost curve.
C) an upward sloping long-run average cost curve.
D) a long-run average cost curve that is shaped like an upside down U.
Answer: C
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The time cost incurred by consumers who must find substitute products after a ban is placed on some good or service is an example of a(n)
a. capital cost d. operating expense b. fixed cost e. implicit cost c. explicit cost
Agency problems in the subprime mortgage market included all of the following EXCEPT
A) homeowners could refinance their houses with larger loans when their homes appreciated in value. B) mortgage originators had little incentives to make sure that the mortgagee is a good credit risk. C) underwriters of mortgage-backed securities had weak incentives to make sure that the holders of the securities would be paid back. D) the evaluators of securities, the credit rating agencies, were subject to conflicts of interest.
The tendency of many economic variables to move together in a predictable way over the business cycle is called
A) recurrence. B) persistence. C) comovement. D) inflation.
The primary cause of inflation is
a. large budget deficits. b. high taxes. c. rapid expansion of the money supply. d. government expenditures that are large relative to the size of the economy.