If a firm increases inputs by 15 percent and output increases by 12.5 percent, the firm is experiencing
A. increasing returns to scale.
B. decreasing returns to scale.
C. constant returns to scale.
D. increasing costs per unit of output.
Answer: B
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Consider the production possibilities curve [PPC] for a country producing only cheese and wine. The first few resources transferred from cheese to wine production are:
a. those that are most specialized in cheese production. b. those that are most specialized in wine production. c. those that are least specialized in cheese production. d. those that are neither specialized in cheese nor wine production. e. those that are highly specialized in both cheese and wine production.
The national debt must be paid back in the future
a. True b. False
Which term represents a situation in which all firms earn zero economic profits producing the output level where P = MR = MC and P = AC?
a. Perfect competition b. Marginal revenue c. Long-run equilibrium d. Shut-down point
If there is a "long and variable time lag" between when a change in monetary policy is instituted and when it impacts aggregate demand and output, this will
a. make it easier for the Fed to properly time changes in monetary policy. b. make it more difficult for the Fed to properly time changes in monetary policy. c. not affect the Fed's ability to time monetary policy changes correctly. d. make it easier for the Fed to control inflation and achieve price stability.