In the short run, the expansion path is A) horizontal. B) vertical. C) diagonal. D) indeterminate. ANSWER A
Date: September 9th, 2020
Which of the following statements best explains why long-run average cost is never greater than short-run average cost? A) In the long run, tangency of the isocost and isoquant is attainable. This is not necessarily true in the short run. B) In the long run, diseconomies of scale might not occur, but in the short […]
Date: September 9th, 2020
The Arrow impossibility theorem suggests A) democracies are doomed to fail in the long run. B) dictatorships are impossible in the long run. C) there is no universally applicable decision rule in a majority-rule democracy. D) there is no way to make democracy better than a dictatorship. ANSWER C
Date: September 9th, 2020
Explain the difference between fixed costs in the short run and fixed costs in the long run. What will be an ideal response? ANSWER In the short run fixed costs are sunk; in the long run, fixed costs are avoidable.
Date: September 9th, 2020
Economies of scale in nuclear power plants exist because of A) more efficient plant management. B) a better understanding of the plant’s idiosyncrasies, or learning-by-doing. C) nuclear power technology changes. D) both A and B. ANSWER D
Date: September 9th, 2020
A cake is to be shared by two people. Both desire the largest piece possible. One of the two will cut the cake. Under which of the following situations will the cutter adopt a Rawlsian social welfare function? A) The person cutting the cake chooses the first piece. B) The person not cutting the cake […]
Date: September 9th, 2020
If the costs of labor and capital increase in the same proportion, the isocost line will A) stay the same. B) shift outward in a parallel fashion. C) rotate inward around the point where only capital is employed in production. D) shift inward in a parallel fashion. ANSWER B
Date: September 9th, 2020
What are the functions for MC and AC if TC = 20q + 10q2? A) MC = 20q; AC = 10q2 B) MC = 20 + 20q; AC = 20 + 10q C) MC = 20 + 10q; AC = 10 + 10q2 D) MC = 20 + 20q; AC = 10q ANSWER B […]
Date: September 9th, 2020
No clearly defined socially preferred outcome may result when majority voting on outcomes because A) often voters don’t understand the outcomes. B) voting may violate the independence of irrelevant alternatives. C) voting may lead to incomplete preferences. D) voting may lead to non-transitive preference. ANSWER D
Date: September 9th, 2020
A U.S. firm currently produces 200 units of output according to the production function q = L0.5K0.5 and faces input prices equal to wU.S. = rU.S = $11. Should the U.S. firm move their company abroad where they will face input prices equal to wabroad = $6.50 and rabroad = $15.00? A) Yes, because the […]
Date: September 9th, 2020
