If a firm doubles its resources and generates an output level which is more than double, it is said to be experiencing:
a. economic fluctuations.
b. recession.
c. diseconomies of scale.
d. increasing marginal returns to a factor.
e. economies of scale.
e
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The market for used cars is shown in the above figure. Neither buyers nor sellers can tell whether any given car is a lemon. Forty percent (40%) of all cars are lemons. Which of the following statements is TRUE?
A) All of the cars will be sold at $1,600. B) No cars will be sold. C) Only lemons are sold for $1,000. D) Only good cars will be sold for $2,000.
The government, concerned about the wealth redistribution problem caused by the inequality of debt holdings, intervenes by
a. making a special effort to sell bonds to corporations b. creating a proportional income tax system c. sometimes instructing commercial banks to divest some of their bond holdings d. prohibiting the sale of bonds to the Federal Reserve e. limiting the purchase of bonds by foreigners
Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?
a. Consumers have experienced an increase in income, and beef-production technology has improved. b. The price of chicken has risen, and the price of steak sauce has fallen. c. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy. d. The demand curve for beef must be positively sloped.
If the natural unemployment rate is 5.5 percent, then the economy is in an inflationary gap when the actual unemployment rate is
A) greater than 5.5 percent. B) less than 5.5 percent. C) 0 percent. D) 5.5 percent.