Explain why shutting down and going out-of-business are different concepts
What will be an ideal response?
Shutting down means that the firm seizes production with the option of starting up production any time in the future. Going out-of-business is equal to exiting the industry. This involves reducing the amount of (the fixed input) capital to zero, which is not possible in the short run.
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If smartwatches are considered substitutes for smartphones, then the decline in the price of smartwatches would, all else equal
A) increase the demand for smartphones. B) decrease the quantity of smartphones demanded. C) decrease the demand for smartphones. D) increase the quantity of smartphones demanded.
The above figure shows the marginal benefit from pollution for two firms. If each firm receives a marketable permit to produce 25 units of pollution, which one of the following is most likely to happen?
A) Firm B will sell some pollution rights to firm A. B) Firm A will sell some pollution rights to firm B. C) Firm A will produce all 50 units of pollution. D) Both firms will produce 25 units of pollution.
You have received your advanced degree in biochemistry with a specialty in recombinant DNA technology. Your colleagues wish to form a partnership to research adenovirus vectors
Your legal counsel advises you on the following aspects of a partnership, yet you tell her, based on your knowledge of economics, that you think one of the following points is INCORRECT. A) An advantage of the partnership would be that it is relatively easy to form, almost as easy as forming a proprietorship. B) The income of the partnership is treated as personal income and is subject only to personal taxation rates. C) The personal assets of each partner should be safe and would not necessarily be at risk due to claims by financial institutions. D) Partnerships often help reduce the costs of monitoring job performance in situations in which it is difficult to measure objectively.
When an economy experiences hyperinflation, it has:
A. extremely long-lasting and painful increases in the price level that slows economic growth. B. a long period of low, steady inflation that aids in economic growth. C. extremely long-lasting and painful increases in the price level that encourages economic growth. D. a long period of stagnant economic growth, and inflationary tactics are used by the government to raise prices.