The change in a firm's total cost from producing one more unit of a good or service is
A) the result of economies of scale.
B) the definition of marginal product
C) the definition of marginal cost.
D) impossible to observe in large firms with many manufacturing plants.
Answer: C
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The rational expectations hypothesis suggests that
A) unanticipated fiscal policy actions are more powerful than monetary policy actions. B) fiscal policy actions only work when accompanied by changes in the money supply. C) anticipated monetary policy actions are more powerful than fiscal policy actions. D) anticipated fiscal and monetary policy actions are not likely to achieve their stated aims.
Suppose that demand for a product falls, but prices are sticky. What is likely to happen to prices and output in that market, in the short run?
What will be an ideal response?