Using Figure 9.1, explain what a firm would do in the short run if the market price of its product dropped below P1
What will be an ideal response?
The firm would shut down since it would be suffering an operating loss. For the firm to remain in business in the short run the price must be equal to or greater than the average variable cost.
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Limits on the quantity or total value of specific products imported to a nation are
A. export subsidies. B. protective tariffs. C. import quotas. D. nontariff barriers.
Items that are purchased by individuals for their own enjoyment are called
A) consumption goods and services. B) capital goods. C) government goods and services. D) exports of goods and services. E) private goods.
"Input-output" macroeconomics stresses that a change in nominal aggregate demand ________ produces an equal-proportional change in every firm's marginal cost, so that firms should consider indexing their price to nominal aggregate demand a very
________ pricing strategy. A) need not, safe B) need not, risky C) must, safe D) must, risky
Absolute advantage states that a country has an advantage over another if it can produce a good with fewer resources
a. True b. False Indicate whether the statement is true or false