If a firm experiences economies of scale,
a. it moves up along the long run average total cost curve.
b. expansion of output becomes more expensive for the firm.
c. the firm can reduce its per unit cost by producing less.
d. the firm must shut down in the long run.
e. the firm can reduce its per unit cost by expanding production.
e
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Suppose the price of capital and labor remain constant. As a firm's expenditures for capital and labor increase, its isocost line
A) rotates outward on the Y-intercept. B) shifts in parallel to the original isocost line. C) rotates outward on the X-intercept. D) shifts out parallel to the original isocost line.
Tax wedge is the difference between tax induced price paid by customer and the tax amount
A. True B. False C. Uncertain
Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect
a. most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. b. most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. c. the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. d. a large percentage of smokers to quit smoking in response to the tax.
Elasticity is
a) a measure of how much buyers and sellers respond to changes in market conditions b) the study of how the allocation of resources affects economic well-being c) the maximum amount that a buyer will pay for a good d) the value of everything a seller must give up to produce a good