If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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Suppose labor is a variable input and capital is a fixed input, and consider a firm's short-run average, average variable, and marginal cost curves.
(i) What geometric relationships hold among these three curves? (ii) How would these curves be affected by an increase in the wage rate paid to labor? (iii) How would these three curves be affected by an increase in the rental rate paid to capital?
Demand is inelastic if
a. the percentage change in price is greater than the percentage change in quantity demanded b. the percentage change in price is less than the percentage change in quantity demanded c. the percentage change in price is equal to the percentage change in quantity demanded d. the value of price elasticity is equal to -1 e. the value of price elasticity is less than -1 (e.g., -3)
The European Monetary System represented a
A) exchange rate regime with 'bands.' B) crawling peg. C) a flexible exchange rate regime. D) none of the above
Your roommate has the right to play her harmonica during the day. But you find the best time to study is during the day, and the harmonica playing makes it hard for you to concentrate. You tell your roommate that you will do her laundry every week if she does not play the harmonica during the day and she agrees to this. This is an example of
A. the Coase theorem. B. liability rules. C. the drop-in-the-bucket problem. D. an injunction.