Excess capacity is
a. an example of the inefficiencies of monopolistically competitive markets.
b. a short-run problem but not a long-run problem.
c. a characteristic of rising average total cost curves.
d. Both a and b are correct.
a
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Suppose shoppers typically pay twice as much for frozen "convenience" foods compared to similar dinners they could prepare themselves. An economist would say
A) the purchase is inefficient because the consumer doesn't really need to pay twice as much for essentially the same dinner. B) the purchase is inefficient because the frozen dinner is of even lower quality than the homemade dinner, yet twice as expensive. C) the purchase is efficient if the consumer feels the savings in preparation time justifies the higher price. D) the purchase is efficient, but the consumer is still probably behaving irrationally.
Which is essential to economic growth, whether in Latin America, sub-Saharan Africa, Asia, Europe, or North America?
A) Limits on the use of non-renewable resources B) International aid C) The rule of law D) An effective system of trade tariffs and quotas E) The evolution of a single world currency