A firm's isocost line shifts parallel outward from the original isocost line as its
A. total cost for capital and labor decreases.
B. total cost for capital and labor increases.
C. total cost for capital increases and its total cost for labor decreases.
D. total cost for capital decreases and its total cost for labor increases.
Answer: B
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Suppose we observe the price level increasing and real GDP decreasing. An explanation for this is that
A) the dollar weakened and the effect on aggregate supply was less than the effect on aggregate demand. B) the dollar weakened and the effect on aggregate supply was greater than the effect on aggregate demand. C) the dollar strengthened and the effect on aggregate supply was less than the effect on aggregate demand. D) the dollar strengthened and the effect on aggregate supply was greater than the effect on aggregate demand.
In a free-market economy, prices coordinate society’s decisions about
A. how and for whom to produce. B. what, how, and for whom to produce. C. how and for whom to produce but not how much to produce. D. how much and for whom to produce but not how to produce.
Suppose you transfer $1,000 from your checking account to your savings account. How does this action affect the M1 and M2 money supplies?
a. M1 and M2 are both unchanged. b. M1 falls by $1,000 . and M2 rises by $1,000. c. M1 is unchanged, and M2 rises by $1,000. d. M1 falls by $1,000 . and M2 is unchanged.
Economists refer to the inputs that firms use to produce goods and services as
a. derived factors. b. derived resources. c. factors of production. d. instruments of revenue.