If the price of an inferior good increases, the substitution effect encourages the consumer to purchase less of it while the income effect encourages him to purchase more of it
a. True
b. False
A
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Smart phones are becoming less expensive as new technology reduces the cost of production. In a supply and demand model, explain the effects of the technological innovations and their effect on the quantity of smart phones
What will be an ideal response?
Net Present Value measures the
a. total value of profits over the life of an investment b. discounted value of profits over the life of an investment c. discounted value of revenues over the life of an investment d. interest rate paid on funds borrowed for an investment e. none of the above
If a firm is producing an output level at which marginal revenue exceeds marginal cost in the short run, the firm will increase profits by reducing its output level
a. True b. False Indicate whether the statement is true or false
Every firm has to bear its fixed costs even when it produces nothing
a. True b. False Indicate whether the statement is true or false