Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
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Which of the following explains why supply is more elastic as more time passes?
A) It is difficult or impossible to increase the quantity produced in a short period of time. B) Consumers have more time to search for substitutes. C) Sellers try to take advantage of a high price in the short term. D) The supply curve becomes generally steeper as more time passes. E) There is no explanation for this phenomenon.
The Herfindahl-Hirschman Index is the sum of the
A. Market shares of the top four firms in the market. B. Squared concentration ratios for the firms in the market. C. Squared market shares of the firms in the market. D. Market shares of all the firms in the market.
Which of the following is LEAST likely to be able to regularly engage in price discrimination?
A) a farmer B) an airline C) a university D) a producer of copyrighted computer software
The Razor-Thin Disposable Razor Company is a perfectly competitive firm producing where MR = MC. The current market price of a disposable razor is $3.00. The firm sells 1,800 disposable razors. Its AVC is $2.00 and its AFC is $1.50. What should Razor-Thin do?
A. Decrease production so that AVC will decrease. B. Shut down and produce zero razors because price is less than ATC. C. Continue to produce because price exceeds AVC. D. Increase production so that AFC will decrease.