Why is the government budget constraint different between the short run and the long run?
What will be an ideal response?
In the short run, the government budget constraint consists of tax revenues and borrowing. However, a government cannot borrow indefinitely so that, in the long run, its budget constant consists of only tax revenues.
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Imagine you own a machine that produces perfectly authentic and legal $100 bills. You would use this machine until:
a. the bills became worthless. b. the total cost began to fall. c. the marginal cost was $100. d. the variable cost began to rise. e. the marginal revenue began to fall.
By promoting its brand name heavily, the monopolistically competitive firm
A) earns more profit in the long run. B) signals its long-term intention to stay in the industry. C) signals its intention to leave the industry. D) guarantees a short run profit.