Engineers for The All-Terrain Bike Company determine that a 10% increase in all inputs will cause an equal percentage increase in output. Assuming that input prices remain constant, you correctly deduce that such a change in inputs will cause ________ as output increases.
A. average costs to decrease
B. average costs to increase
C. marginal costs to increase
D. average costs to remain constant
Answer: D
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According to the AS-AD model,
A) the equilibrium is where the AS curve crosses the AD curve, but the amount of real GDP at this point is not always equal to potential GDP. B) the aggregate quantity supplied is typically greater than the aggregate quantity demanded, thereby leading to unemployment. C) the aggregate quantity demanded is typically greater than the aggregate quantity supplied, thereby leading to inflation. D) changes in the amount of potential GDP is the only factor that shifts both the aggregate supply curve and the aggregate demand curve. E) the AS curve is always equal to potential GDP.
The price elasticity of demand is
a. irrelevant to the determination of prices, incomes, and interest rates b. indeterminate in most cases c. the percentage change in price divided by the percentage change in quantity demanded d. the percentage change in price with respect to the percentage change in quantity supplied e. the percentage change in quantity demanded divided by the percentage change in price
Aggregate demand is defined as the total spending
a. of all consumers, business firms, government agencies, and foreigners on final goods and services produced in the United States. b. by all consumers, business firms, government agencies, and foreigners in the United States. c. consumers, businesses, government agencies, and foreigners wish to make in one year. d. of consumers, businesses, and government agencies on final output.
Two workers are employed in the same job by the same firm; however, they are paid different wage rates. This could be explained by differences in
a. the income effect b. the price of the firm's output c. their marginal products due to differences in ability d. working conditions e. risk