If a firm shuts down in the short run, then its:
A. profit will equal zero.
B. total revenue and total cost will fall to zero.
C. economic loss will equal its fixed costs.
D. economic loss will equal its variable costs.
Answer: C
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Explain how the listed events (a-d) would affect the following at Hilton Hotels
i. Marginal cost ii. Average variable cost iii. Average fixed cost iv. Average total cost a. Hilton decides on an across-the-board 5 percent increase in executive salaries. b. Hilton decides to eliminate all print advertising. c. Hilton signs a new contract with the Culinary Workers Union that requires the company to increase wages for all its kitchen workers. d. The federal government starts to levy a $5 room tax on all hotel rooms.
Both adaptive expectations and rational expectations are prone to error (a discrepancy between the expectation and the actual experience). In each case, how does error affect the formation of new expectations?
What will be an ideal response?
Demand for goods in broader category definitions, such as "beverages", is usually less elastic than demand for more narrowly defined goods, such as "diet colas."
a. True b. False
If supply increases and demand decreases, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.
A. lower; lower B. lower; uncertain C. higher; uncertain D. higher; higher