If a production function has two inputs and exhibits constant returns to scale, then doubling both inputs will cause the output to:
A. reduce by half.
B. stay the same.
C. double.
D. quadruple.
Ans: C. double.
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Any firm, competitive or not, desiring to maximize profits, will choose its quantity according to the rule, produce that quantity at which
a. marginal revenue = price. b. marginal revenue = marginal cost. c. average variable cost is at its minimum. d. marginal cost is at its minimum.
What adjusts to restore general equilibrium after a shock to the economy?
A) The LM curve B) The IS curve C) The FE line D) The labor supply curve
Demand-pull inflation is due to:
a. minimum wage laws. b. labor cost increases. c. excess total spending. d. tax increase.
Dissaving occurs when:
A. Income is greater than saving B. Income is less than consumption C. Saving is greater than consumption D. Saving is greater than the interest rate