For many corporations, a major portion of the cost of production is fixed in the short run. Should these very large fixed costs be ignored when the executives are making output and pricing decisions? Why?
What will be an ideal response?
Yes, these fixed costs should be ignored when making short-run output and pricing decisions because they do not affect marginal costs or marginal benefits in the short run. In the long run, all costs are variable costs and there are no long-run fixed costs.
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Refer to Sales Tax. The portion of the tax revenue ultimately paid by consumers is
a. area A + B + C + D. b. area C + D. c. area C + D + E. d. area A + B + C + D + E.
The table above shows four methods for producing 10 computer desks a day. If the cost of a worker is $50 a day and the cost of capital is $150 a day, ________ economically efficient
A) method A is B) method B is C) method D is D) method A or C is
In explaining the downward-sloping aggregate demand curve, the net export effect is:
a. When a nation's price index falls, international capital flows are attracted to it, which causes the net exports to rise. b. When the price index falls, net exports fall because a nation's exports become relatively cheaper and its imports become relatively more expensive. c. When the price index falls, the real money supply rises, causing the real risk-free interest rate to fall, and consumption and real investment to rise. d. When the price index falls, net exports rise because a nation's exports become relatively cheaper and its imports become relatively more expensive. e. When the price index falls, central banks intervene to bring prices back to where they were, causing net exports to rise.
To combat unemployment the government should use fiscal and monetary policies to
a. run a deficit and increase the money supply. b. run a deficit and decrease the money supply. c. run a surplus and increase the money supply. d. run a surplus and decrease the money supply.