The Long-Run Average Total Cost Curve

question 110

Multiple Choice

The long-run average total cost curve:

• A) will rise if diminishing returns are encountered.
• B) will fall if diminishing returns are encountered.
• C) will rise if economies of scale are incurred.
• D) is based on the assumption that all resources are variable.

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Definitions:

Rational Expectations School

A theory proposing that individuals and firms make decisions based on their rational outlook, available information, and past experiences.

Monetary Policy

Monetary policy is the macroeconomic policy laid down by the central bank involving management of money supply and interest rates to control inflation, consumption, growth, and liquidity.

Expansionary Policy

A macroeconomic strategy used by governments or central banks to stimulate the economy by increasing money supply or reducing taxes.

Fiscal Policy

Government strategies to influence economic conditions through spending and taxation decisions to manage economic growth, inflation, and unemployment.