You sell cupcakes. One day you double the time you spend and double all your inputs, and make twice as many cupcakes. Your cupcake production function has
a. decreasing returns to scale.
b. zero returns to scale.
c. constant returns to scale.
d. increasing returns to scale.
c
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Consider two economies: A and B. The nominal interest rate is the same in both economies, but the rate of inflation is higher in economy B. Which of the following statements will then be true?
A) The real interest rate will be the same in both economies. B) The real interest rate will be higher in economy B. C) The real interest rate will be higher in economy A. D) Whether the real interest rate is higher in economy A or B will depend on the number of borrowers in both economies.
Most t-shirts bought by Americans are made in Asia. Producers in Asia making t-shirts trade with America because they
A) cannot produce enough t-shirts for their own domestic consumption. B) receive a higher price than they would receive from another buyer. C) cannot lower their price any lower and still make a profit. D) must export something to the United States. E) receive a lower price than they would receive from another buyer.