Which of the following is most likely an example of diseconomies of scale?
A. Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production costs.
B. The XYZ Co. increased production capacity by 25 percent and experienced a 30 percent increase in its total cost.
C. Widget Manufacturing doubled its production by opening a new plant that was identical to its old plant.
D. The per-unit costs on Excel Publishing Company's manuals fell after it received a large order from the government.
Answer: B
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Use the following graphs to answer the next question.
In the graphs, the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve, respectively. All numbers are in billions of dollars. The interest rate and the level of investment spending in the economy are at point B on the investment demand curve. To achieve the long-run goal of a noninflationary, full-employment output of Qf in the economy, the Fed should ________.
A. increase investment spending from $30 billion to $60 billion B. decrease the interest rate from 8% to 6% C. decrease the interest rate from 10% to 8% D. decrease the interest rate from 6% to 4%
Which of the following situations is least likely to involve strategic interaction?
A) two countries deciding whether to impose trade restrictions on each other B) competing convenience stores deciding how much to charge for coffee C) two customers deciding which toaster to buy from Target D) a state legislature deciding whether to legalize casino gambling
Long time lags hamper the effectiveness of economic policy because: a. people don't want to wait for economic recovery
b. the longer unemployment lasts, the more intense inflation becomes. c. by the time the impact of a policy is felt, a new problem may have come along that requires a different policy, which may make the economic situation even worse. d. if inflation is allowed to continue for too long, it becomes immune to policy interference. e. if unemployment is allowed to continue for too long, it becomes immune to policy interference.
Which of the following occurs during a recession?
a. Output falls, employment rises, and unemployment rises. b. Output rises, employment falls, and unemployment falls. c. Output falls, employment falls, and unemployment rises. d. Output rises, employment rises, and unemployment falls. e. Output falls, employment falls, and unemployment falls.