According to new growth theory ________
A) ever-advancing productivity keeps the population growth rate high
B) knowledge does not experience diminishing returns
C) growth rates and income levels per person around the globe will converge
D) knowledge is subject to the law of diminishing returns
B
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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
Why does a firm in a competitive industry charge the market price?
a. If a firm charges less than the market price, it loses potential revenue. b. If a firm charges more than the market price, it loses all its customers to other firms. c. The firm can sell as many units of output as it wants to at the market price. d. All of the above are correct.
A working knowledge of both markets and firms is important for managers to be effective because it
A. helps them train their subordinates better. B. helps them earn high bonuses. C. helps them make appropriate strategic and operational decisions. D. helps them to exploit other executives.
Answer the following statement(s) true (T) or false (F)
1. A firm that has not shut down in the short run will not shut down in response to a decrease in the marginal costs. 2. For prices greater than the minimum value of average variable cost, the firm's short-run supply curve coincides with its short-run marginal cost curve. 3. Given two supply curves passing through the same point, the flatter one has the higher elasticity. 4. Industry's supply curves tend to be less elastic than the supply curves of individual firms. 5. The elasticity of supply is positive because prices and quantities are always positive.