Why would a farmer continue farming in the short run, even though his ATC was greater than the price he received for his crops?
What will be an ideal response?
In the short run, farmers’ fixed costs are high relative to their variable costs. Fixed costs include expenses such as interest, rent, taxes and mortgage payments on land, buildings and equipment. As long as farmers maintain production in the short run, they will lose less than they would if they completely shut down production. Only in the long run would it make sense for them to completely exit production.
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Control of the nation's quantity of money is handled by
A) Congress. B) the Federal Reserve System. C) the President of the United States. D) Congress, the Federal Reserve System, and all commercial banks.
Suppose the real interest rate is 4% and the expected inflation rate is 3%. If the money supply increases by 10% and output, the real interest rate, and the expected inflation rate are unchanged, then the price level increases by
A) 3%. B) 4%. C) 7%. D) 10%.
If a firm has at least some control over the price of its product, then the firm cannot be in which market model:
A. Oligopoly B. Pure monopoly C. Pure competition D. Monopolistic competition
Diminishing returns means that
A) each additional unit of labor produces successively more real GDP. B) hiring more labor must lower the real wage rate. C) each extra unit of real GDP produced requires less labor. D) hiring more labor results in less real GDP. E) each additional unit of labor produces successively less real GDP.