Suppose you are the owner of a softball team and you are hiring laborers (players). Suppose also that not all players are equally talented, but that union rules require that they all receive the same salary. If you measure output by the number of runs scored in a season, your total variable cost curve will take what shape, and why?
a. U-shaped because softball teams like this one are no different from other businesses
b. U-shaped because even though salaries are identical, some players are better and will score more runs
c. increasing but at different rates because there are only so many times players can come to bat
d. increasing but at different rates because even though salaries are identical, some players are better and will score more runs
e. increasing at a constant rate because union rules require uniform salaries for players
D
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If the Federal Open Market Committee wants to decrease the money supply through open market operations it will
A) buy U.S. Treasury Securities. B) decrease the discount rate. C) sell U.S. Treasury Securities. D) increase the discount rate.
A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only. B. aggregate demand curve only. C. aggregate demand curve, and the short-run aggregate supply curve would shift in response. D. short-run aggregate supply curve and the long-run aggregate supply curve.
If the elasticity of demand for a good is 0.2, then the demand for that good is
A. perfectly elastic. B. elastic. C. unit elastic. D. inelastic.
With the Lucas supply function, a price surprise means
A. actual price is greater than expected price. B. actual price is less than expected price. C. actual price is either greater than or lower than expected price. D. actual price equals expected price.