What Have Economists Often Observed While Studying the Effects of Public

question 142

Multiple Choice

What have economists often observed while studying the effects of public policy changes?

• A) There is a difference between the long run and the short run.
• B) Unemployment and inflation are directly related in the short run.
• C) Stock prices are indirectly related to capital investment.
• D) If the policy is well designed, it will always be effective.

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Definitions:

Per-Unit Cost

The cost associated with producing one unit of a product, calculated by dividing total production costs by the number of units produced.

Diseconomies of Scale

The situation where a company or business grows so large that the costs per unit increase, typically due to inefficiencies.

Economies of Scale

Economies of scale describe the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Average Cost

The total cost of production divided by the quantity of output, representing the cost per unit of output.