The law of diminishing returns explains why
a. monopolies have a guaranteed profit margin
b. short-run MC and AVC curves are U-shaped
c. the production possibilities curve is bowed out
d. long run supply curves are downward sloping
e. total product is a straight line
B
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Consider the market for peanut butter. If there is a decrease in the price of deli turkey slices (a substitute in consumption for peanut butter) along with a decrease in the price of peanut brittle (a substitute in production for peanut butter), the
A) equilibrium price of peanut butter definitely rises. B) equilibrium quantity of peanut butter definitely increases. C) equilibrium price of peanut butter might rise or fall. D) equilibrium price of peanut butter definitely falls. E) equilibrium quantity of peanut definitely decreases.
Assuming each policy is performed with the same magnitude, which of the following would be the most restrictive monetary policy action on the part of the Federal Reserve?
a. Sell government securities, raise reserve requirements, and lower the discount rate b. Buy government securities, raise reserve requirements, and raise the discount rate c. Sell government securities, lower reserve requirements, and raise the discount rate d. Sell government securities, raise reserve requirements, and raise the discount rate