Examine the two figures below. Which illustrates a society that produces more capital goods than consumer goods?
What will be an ideal response?
figure b
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The decision between whether to consume or to invest has a significant impact on economic growth in the future, or the long run. When society makes a choice to plan for the future by producing more capital goods than consumer goods, society invests in new capital and the long-run production possibilities frontier expands outward much more (Figure B) than it would have if it chose to produce more consumer goods than capital goods (Figure A).
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Tom, a math major, examines Jane's economics class notes and observes that when price-taking firms earn economic profit, they do not seem to produce a quantity that minimizes their costs. Is he correct? Is there significance to this observation?
If the average total cost curve is falling, what is necessarily true of the marginal cost curve? If the average total cost curve is rising, what is necessarily true of the marginal cost curve?
In 2015, exports represented:
A. about 30 percent of U.S. GDP. B. about 1 percent of U.S. GDP. C. about 13 percent of U.S. GDP. D. nearly 20 percent of U.S. GDP.
When government intervenes in the production process because external costs exist, it typically attempts to shift the industry's
A) demand curve to the right. B) demand curve to the left. C) supply curve to the right. D) supply curve to the left.