Refer to Figure 26-11. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point B
A) the unemployment rate is very, very low.
B) incomes and profits are rising.
C) firms are operating above their normal capacity.
D) the economy is below full employment.
E) there is pressure on wages and prices to rise.
D
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What is the great advantage of adjudication over legislation in the management of negative externalities?
A) Adjudication has lower costs. B) Adjudication maintains the continuity of expectations. C) Courts are bound by the rule of law and legislatures are not. D) Courts can act more quickly than legislatures. E) There are no clear answers in such cases.
State the law of diminishing returns. How do diminishing returns differ from diseconomies of scale? Be sure to define diseconomies of scale in your answer
What will be an ideal response?
The short-run supply curve of a perfectly competitive industry with firms having identical costs is:
a. a horizontal line at the market price. b. a vertical line at the equilibrium output. c. an upward rising curve. d. a downward sloping step function.
The replacement of the phonograph by the cassette tape player and the eventual replacement of the latter by CD and MP3 players is an example of
a. economies of scale. b. planned obsolescence. c. diseconomies of scale. d. creative destruction.