If the shut-down rule, p < AVC, is the same in the short run and the long run, explain why the shut-down prices may be different
What will be an ideal response?
In the long run all costs are variable. In the long run, the average variable cost is usually higher than in the short run.
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The social surplus in a market is $50. If another economic agent enters the market such that the marginal cost he incurs is $10 and the marginal benefit he receives from the trade is $5, then which of the following statements is true?
A) The social surplus will remain the same. B) The social surplus will increase by $5. C) The social surplus will decrease by $5. D) The social surplus will increase by $10.
In the short run in the Keynesian model, an increase in the domestic money supply would cause domestic output to ________ and the domestic real interest rate to ________
A) rise; rise B) fall; rise C) rise; fall D) fall; fall