A firm experiences diminishing marginal returns because:
A. all factors of production are variable.
B. people "learn by doing."
C. all factors of production are fixed.
D. at least one factor of production is fixed.
Answer: D
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Assume that goods X and Y are substitutes and are produced in perfectly competitive markets. If there is a decrease in the supply of good X, which of the following will happen in the market for good Y in the long run?
A) Firms will exit, causing market price to rise. B) Firms will enter, causing market price to fall. C) Price will be higher at the new long-run equilibrium as a result of entry into the market. D) The firms that were already in the industry will continue to earn positive economic profit.
According to the accelerationist Phillips curve, ________
A) expectations adjust continually to the latest information B) increases in inflation cause the unemployment gap to widen C) inflation will change so long as an unemployment gap persists D) all of the above E) none of the above