If increasing returns to scale are present, the long-run average cost increases as more output is produced
Indicate whether the statement is true or false
False. Increasing returns to scale imply that with a doubling of inputs, output more than doubles. Since average cost is the ratio of total cost divided by output, this increase in inputs will cause the numerator to be just double the old value while the new denominator is more than double the old value. As a result, long-run average cost falls as more output is produced.
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The practice of the only seller in a market charging a price at the highest level that would still inflict a loss on a new entrant into the market is called
A) limit pricing. B) collusive pricing. C) agile pricing. D) trigger pricing.
Rising velocity means that people want to hold ________ nominal money per dollar of nominal GDP, which ________ the inflationary tendency of an increase in the money supply as one way of re-equating the demand and supply of money
A) more, strengthens B) more, weakens C) less, strengthens D) less, weakens
If a firm with two large plants installs a large, custom built packing machine in each of its plants, the custom packing machine is an example of ________.
A) managerial diseconomies B) specialized capital C) a compensating wage differential D) geographic variation
Along the intermediate range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
a. both the price level and real GDP. b. only real GDP. c. only the price level. d. real GDP and reduce the price level.