Halifax & Smyth (H&S) is a clothier that specializes in expensive men's suits, and the firm makes the suits from wool fabrics that are woven by one of the firm's divisions
This division is not the only source for this material, and H&S could buy or sell wool fabric in the outside competitive market. H&S will buy some of the wool fabric that it needs for suits from the outside market if the: A) market price is less than the optimal transfer price if the outside market did not exist.
B) market price is less than the point where the net marginal revenue of weaving wool fabric intersects the marginal cost of wool fabric.
C) market price is less than the point where the net marginal revenue of assembling men's suits intersects the marginal cost of assembly.
D) Both A and B are correct.
D
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Refer to Figure 16-6. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and no fiscal or monetary policy is pursued, then at point B
A) the unemployment rate is very low. B) there is pressure on wages and prices to fall. C) income and profits are falling. D) firms are operating at below capacity. E) the economy is below full employment.
Goods are scarce when:
a. their price is too low. b. their price is too high. c. the amount people want is more than the amount available at a zero price. d. people want less of something as compared to what is available. e. their prices are controlled.
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
Which of the following statements is definitely true when price is less than average total cost for a firm producing the profit-maximizing level of output in the short run?
A) The firm is running a loss in an accounting sense, so that total revenue is less than total explicit costs. B) The firm will minimize its losses by shutting down. C) The firm will be earning negative total revenue. D) The firm is incurring an economic loss.