An increase in output would result in a rise in long-run average costs when there are
A) economies of scale.
B) diseconomies to scale.
C) constant returns to scale.
D) the law of diminishing marginal product.
Answer: B
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If a tax cut increases people's labor supply, then
A) tax cuts increase potential GDP. B) tax cuts decrease aggregate demand. C) tax cuts decrease potential GDP because the real wage rate falls. D) tax cuts cannot affect aggregate demand. E) Both answers B and C are correct.
The term "value added" is used to describe:
a. the increase in the value of a product that occurs at each stage of production. b. the amount subtracted from the value of goods because of inflation. c. the total value of all intermediate goods used in the production of the final good. d. the amount paid in the final sale of a product or service. e. the amount subtracted from the value of resources because of depreciation.