Robert Lucas Reflects the View of Many Economists When He

question 12

Multiple Choice

Robert Lucas reflects the view of many economists when he argues that the most effective way to reduce world poverty is to:

• A)eliminate recessions.
• B)increase long-run growth.
• C)provide loans to developing countries.
• D)take money from those who are very wealthy and give to those who are very poor.

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Definitions:

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced, decreases as production increases.

Average Total Cost

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

Economies of Scale

Cost advantages obtained by an increase in production, leading to a reduction in average costs per unit.

Long-run Average Total Cost

The average total cost of production when all inputs, including capital, are variable, typically illustrating economies of scale.