“The long-run industry supply curve in a constant-cost industry graphs as a horizontal line.” Explain
What will be an ideal response?
This is true because no matter what the size of the firm, and how many firms enter the industry, the average total cost or unit cost does not change by definition. Therefore, in a competitive industry the price will equal this average cost no matter what the level of output, and graphically this is a straight horizontal line.
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Which of the following is NOT a flow variable?
A) saving B) consumption C) investment D) savings
Which of the following is an example of a Pigovian tax?
A) a tax imposed on a utility that internalizes the cost of externalities caused by the utility B) payments by utilities to obtain tradable emission allowances C) payments for licenses to pollute D) a payroll tax
If the stock market continues a steady climb upwards, this ____ consumer confidence and wealth, leading to ____ consumption, and ____ aggregate demand
a. increases, decreased, increased b. decreases, decreased, decreased c. increases, increased, increased d. increases, increased, decreased
Development economics must have a scope wider than traditional economics because
a. values and attitudes play little role in the pace of development. b. people in developing societies do less utility-maximizing. c. transformation of social institutions is necessary for development. d. all of the above.