A firm increases its output and its average total costs remain unchanged. Is the firm experiencing increasing returns to scale, constant returns to scale, or decreasing returns to scale?
What will be an ideal response?
The firm is experiencing constant returns to scale.
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Refer to the above figure. Suppose E is the original equilibrium. An increase in the demand for dollars will be reflected in this figure by
A) an increase in the demand for yen as both imports and exports increase. B) a decrease in the demand for yen as the U.S. balance of payments improves. C) an increase in the supply of yen as Japan tries to buy more U.S. goods. D) a decrease in the supply of yen as Japan is able to pay less for U.S. goods.
Why don't the winners from free trade win the political argument?
What will be an ideal response?
At an interest rate of 3%, what is the present value of $1000 to be received five years from now?
A) $863 B) $1,667 C) $1,159 D) $850
Suppose a firm in a perfectly competitive market is operating at its profit-maximizing level of output. Will the firm suspend operations if it faces a reduction in the price it can charge for its product?
a. No, because it can always raise its prices in the short run. b. No, because it can always raise its prices in the long run. c. No, as long as the firm earns sufficient revenue to pay all of the variable costs. d. Yes, since it never makes sense to operate at a loss, even in the short run. e. No, because it always makes sense to operate at a loss, even in the long run.