Which of the following statements is true of the economy in the long run? In the long run,
1. real GDP eventually moves to potential because all wages and prices are assumed to be flexible.
2. the economy can achieve its natural level of employment and potential output at any price level.
3. there is no cyclical unemployment.
A. I only
B. I and II only
C. I and III only
D. I, II, and III
Ans: D. I, II, and III
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A price ceiling can often be viewed as: a. the government setting price above market equilibrium price
b. an implicit tax on producers and an implicit subsidy to consumers. c. the government setting price below market equilibrium price. d. Both b and c.
If we know average total cost and the amount of output, then we can always calculate total cost by
A. adding average total cost and the amount of output. B. subtracting the amount of output from average total cost. C. dividing average total cost by the amount of output. D. multiplying average total cost by the amount of output.