The notion that when the price of an input falls, a firm's marginal cost curve shifts down and overall production increases so that more of every input is employed is known as
a. the output effect.
b. the substitution effect.
c. the input effect.
d. the cost effect.
a
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Under a fixed exchange rate system, at high domestic real interest rates the demand for domestic currency ________, so the central bank ________ foreign-exchange reserves
A) increases; acquires B) increases; loses C) decreases; acquires D) decreases; loses
All of the following explain the downward slope of the aggregate demand curve EXCEPT
A) changes in the stock of real wealth held by individuals. B) the effect of changing interest rates on the quantity demanded of interest-rate-sensitive goods. C) the availability of foreign substitute goods. D) the presence of unused production capacity and unemployment.
The excise tax on gasoline is an example of a tax based on the ability-to-pay principle
a. True b. False
In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company exhibits
a. diseconomies of scale because total cost is rising as output rises. b. diseconomies of scale because average total cost is rising as output rises. c. economies of scale because total cost is rising as output rises. d. economies of scale because average total cost is falling as output rises.