Malmud wants to know how much the economy of his country has grown since he was born 30 years ago. First, he compares the GDP from 30 years ago to today’s GDP and finds that the economy grew by over 300 percent. This seems wrong to Malmud, because he does not believe his country is vastly wealthier than it was when he was young. Then he realizes that he has not considered how much the population of his country has grown over that same period. To get a better picture of how much the country’s economy has grown, he should look at the change in ______.
a. average incomes
b. physical capital
c. real GDP per capita
d. diminishing returns
c. real GDP per capita
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Managers can increase firm profits by:
A) increasing revenue only. B) decreasing costs only. C) increasing revenue and decreasing costs. D) none of the above.
_________ is where it is cheaper for separate products to be produced independently than for one firm to produce the same products jointly.
Fill in the blank(s) with the appropriate word(s).
The long-run aggregate supply curve of an economy corresponds to
A. a point on the production possibilities curve. B. a point outside the production possibilities curve. C. a point inside the production possibilities curve. D. none of these: there is no relationship between the long-run aggregate supply curve and the production possibilities curve.
In a principal-agent problem, if the contract used leads to the maximum of the principal's and agent's combined value (profits, payoffs), we can say that this contract features
A) inefficiency in production, since only the principal's profits should be maximized. B) inefficiency in production, since only the agent's payoffs should be maximized. C) efficiency in production. D) inefficiency in production, since the agent's payoffs should be maximized and the principal's profits should be minimized.