In the long run, a perfectly competitive firm will react to losses by:
a. reducing production or shutting down.
b. reducing its inputs.
c. increasing its output
d. increasing the price of its product.
a
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The world price of a good is determined by the
A. demand for that good in the world market. B. country that produces the good. C. supply of that good in the world market. D. worldwide demand and supply of that good.
The social cost of a good or service includes the producer's private cost and all the external costs
Indicate whether the statement is true or false
If the economy is in equilibrium with real GDP less than potential GDP, there is ________ gap and a fiscal policy that ________ is appropriate
A) an inflationary; increases aggregate demand B) an inflationary; decreases aggregate demand C) a recessionary; increases aggregate demand D) a recessionary; decreases aggregate demand E) a recessionary; increases potential GDP
Which of the following is a key property of models?
A) All economic models begin with assumptions. B) Empiricism is not essential for testing models. C) All models can be used for a limited time period only. D) All models are consistent and do not make incorrect predictions.