For a wood furniture manufacturer, an increase in the cost of lumber will cause the supply curve to:
A. shift to the right.
B. become steeper.
C. become flatter.
D. shift to the left.
Answer: D
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Over time in the long run we expect unplanned inventory expenditure to:
A. equal zero as planned inventories should equal actual inventories. B. increase because firms have a hard time figuring out what consumers want. C. be negative as firms will tend to reduce production is they think people won’t purchase their product. D. be positive as on average firms tend to be optimistic about sales, but if they don’t sell product they store it.
Suppose that FDI has "spillover" benefits for the recipient nation (such as spurring technological innovation, more FDI, or growth in labor productivity). These spillover effects might help explain why:
a. in Singapore, wages fell in the short run. b. in Singapore, wages fell and returns to capital rose in the long run. c. in Singapore, wages rose and, depending on the calculation used, returns to capital were close to original levels in the long run, which contradicted the HO model. d. in Singapore, absolutely nothing changed in either the short or the long run.
Suppose there are three firms in a market. The largest firm has sales of $50 million, and each of the other two firms has sales of $25 million. The Herfindahl-Hirschman Index of this industry is
A. 3,750. B. 2,500. C. 3,125. D. 2,550.
If social regulation increases a firm's fixed and variable costs:
a. then both marginal cost and average total cost will increase, and the firm will produce more. b. then both marginal cost and average total cost will increase, and the firm will produce less. c. then both marginal cost and average total cost will decrease, and profits will increase. d. then marginal cost will increase, average total cost will be constant, and price will decline. e. then both price and quantity produced will fall.