Transactions costs prevent purchasing power parity from holding because:
A. they include the expense of transporting the goods to be sold in another country.
B. they make creating exchanges too costly in some places.
C. the price of a good sold in another country must include the cost of getting it there, which can be high and cause a large price differential.
D. All of these statements are true.
Answer: D
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If average fixed cost exceeds average variable cost, a firm should shut down in the short run
a. True b. False
Sun City's public bus line has been operating at a deficit. The city decides to raise the fare from 50 cents to 75 cents, anticipating enough additional revenue to cover the deficit. What assumption is the city making about price elasticity?
The Earned Income Tax Credit is an example of a
a. minimum-wage law. b. price ceiling. c. wage subsidy. d. rent subsidy.
The equipment and structures available to produce goods and services are called
a. physical capital. b. human capital. c. the production function. d. technology.