The upward-sloping portion of the long-run average total cost curve is caused by:
A. diseconomies of scale.
B. the presence of fixed inputs.
C. indivisible setup costs.
D. the absence of fixed inputs.
Answer: A
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Suppose a business offers a 10% discount on the good x1 that it sells.
a. Illustrate a consumer's before and after-discount budget constraint by modeling x2 as a composite good. b. Suppose you observe only the after-discount consumption decision of the consumer. Can you tell from this information how much revenue the firm is giving up (from this consumer) by offering the discount? If so, illustrate this in your graph. c. Suppose that, instead of the firm offering the 10% discount, the government subsidized consumption of x1 sufficiently to reduce p1 by 10%. Suppose again that you only observe the after-subsidy decision of the consumer. Can you tell how much of a subsidy payment is made to this consumer by the government? If so, illustrate it in your graph. d. Why are your answers to (b) and (c) different? What will be an ideal response?
Demand pull inflation occurs when the:
A. price of a key input increases suddenly. B. price level changes in response to changes in the business cycle. C. price of necessity goods increases suddenly. D. business cycle becomes sporadic and unpredictable.
A more efficient process for refining oil into gasoline is developed. As a result, the market price of gasoline: a. and the quantity of gasoline purchased both increase
b. increases and the quantity of gasoline purchased falls. c. decreases and the quantity of gasoline purchased rises. d. decreases and the demand curve for gasoline shifts to the right.
Suppose that the price of an ounce of gold is 120 pesos in Mexico and 2,400 yen in Japan. Then the Japanese yen is worth two hundred times the value of a Mexican peso
a. True b. False Indicate whether the statement is true or false