Assume that a manufacturer of new handheld computer makes a sales pitch to a retailer in which he is willing to sell 5,000 at $10, 7,000 for $8, 9,000 for $7
But any orders above that amount will start costing the retailer more money on a per-unit basis. The president of the retailer asks why he can't get a discount if he orders more. Can you provide an answer that would help this president understand this apparent paradox?
The explanation is that the manufacturer apparently faces a U-shaped average cost curve. He is able to offer discounts up to the 9,000 unit level because that represents output on the downward-sloping side of the curve down to the minimum average total cost. Output levels past this point start driving the average total cost upwards.
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In some cases, social regulation may alter individuals' behavior. For example, there is evidence to indicate that as more automobile safety regulations have been introduced, more individuals have begun to drive recklessly
This phenomenon is known as A) the feedback effect. B) the share-the-gains effect. C) the share-the-pains effect. D) the capture effect.
Based on what you know about the determinants of price elasticiyt, the demands for agricultural products, like, wheat, soybeans, milk, and eggs tend to be
a. price inelastic b. price elastic c. price inelastic only in the long run d. price elastic only in the short run e. price elastic only in the long run
Using the standard 45-degree line diagram, how does an increase in investment spending effect the expenditure schedule?
a. It shifts the expenditure schedule downward. b. It shifts the expenditure schedule upward. c. It increases the slope of the expenditure schedule. d. It decreases the slope of the expenditure schedule.
In the long run, a firm should exit the industry if its total costs exceed its total revenues
a. True b. False Indicate whether the statement is true or false