Econ exam 2

Suppose Chris is a potter who makes mugs. His total costs depend on the number of mugs he makes each day, as shown in the accompanying table. Chris's fixed cost is ______ per day

$10

Gross domestic product under states the total production of final goods and services because of the omission of

The underground economy

When Chris produces 5 mugs per day, his average variable cost is

Total cost - fixed cost / # of mugs 40-10 = 30/5 = $6

The marginal cost of the 4th mug per day is

Change in $/change in quantity 32-25=7 4-3=1 7/1= 7

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

GDP is much larger than GNP

If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is

Nominal/real x100 125

Which of the following is the most likely to be a fixed factor of production at a farm

The land on which the farm is located

The size of the underground economy would tend to decrease if the government of a country

decreased government regulations on businesses.

To produce 150 units of output, a firm must use 3 employees per day. To produce 300 units of output, the firm must use 8 employees per day. Apparently, the firm is:

experiencing diminishing returns.

Nominal GDP will increase

if either the price level or the quantity of goods and services produced rises.

fixed factor of production

is fixed only in the short run

A variable factor of production

is variable in both the short run and the long run.

If a production process exhibits diminishing returns, then as output rises:

marginal cost will eventually increase

Real GDP will increase

only if the quantity of final goods and services produced rises.

Which of the following is included in both the us GDP and us GNP

the value of all cars produced by General Motors in the United States

One reason that variable factors of production tend to show diminishing returns in the short run is that:

there is only so much that can be produced using additional variable inputs when some factors of production are fixed.