Which of the following best describes the idea of excess capacity in monopolistic competition?
a. Firms produce more output than is socially desirable.
b. The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve.
c. Due to product differentiation, firms choose output levels where price equals average total cost.
d. Firms keep some surplus output on hand in case there is a shift in the demand for their product.
b
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To reduce the effects of crowding out caused by an increase in government expenditures, the Federal Reserve could
a. increase the money supply by buying bonds. b. increase the money supply by selling bonds. c. decrease the money supply by buying bonds. d. increase the money supply by selling bonds.
Human capital refers to the
A. number of workers available in the economy. B. tools and equipment available to workers. C. education, training, and skills of workers. D. amount of financing available to start-up firms.