The "J-Curve Effect

question 43

Multiple Choice

The "J-curve effect"

• A)happens most of the time, in the short run.
• B)actually only occurs in about 40 percent of the cases according to a study by Sebastian Edwards.
• C)is a long-run phenomenon, not a short-run one.
• D)none of the above.

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Definitions:

Opportunity Cost

The cost of what is forgone in order to pursue a certain action or decision.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm's or industry's output expands.

Factor Suitability

A principle in economics that factors of production such as land, labor, and capital are more productive when appropriately matched with their specific uses or industries.

Law of Diminishing Returns

The Law of Diminishing Returns is an economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.