Suppose the economy is in long-run equilibrium. In a short span of time, there is a large emigration of skilled workers, a major depletion of oil fields, and a major new regulation limiting electricity production. In the short run, we would expect
a) the price level to rise and real GDP to fall.
b) the price level and real GDP both to rise.
c) the price level to fall and real GDP to rise.
d) the price level and real GDP both to stay the same.
Ans: a) the price level to rise and real GDP to fall.
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Suppose the cost of producing two goods, x and y, can be represented as C = ax + by + cxy. If the measure of economies of scope, SC, is zero, then which of the following must be TRUE?
A) a = b B) a + b = -c C) c = 0 D) a = -b
Many people have turned to the Internet to get the news. This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their:
A. Average fixed costs to increase B. Average total costs to decrease C. Average fixed costs to decrease D. Marginal costs to increase