Is a firm economically inefficient if it can cut its costs by producing less? Why or why not?
What will be an ideal response?
Economic efficiency occurs when the firm produces a given level of output at the least cost. If a firm can decrease production costs by decreasing output, it is not necessarily economically inefficient. If it is producing the new level of output at the least possible cost, it is achieving economic efficiency.
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Bread and butter are complements. A decrease in the price of bread results in a(n)
a. decrease in the supply of break b. increase in the demand for butter c. increase in the demand for bread d. increase in resource prices e. violation of the law of demand
By failing to expand output to the point where marginal benefit equals market price, firms with market power produce less of the good and charge a higher price than would be socially optimal
Indicate whether the statement is true or false
When a decrease in one or more components of private spending completely offsets an increase in government spending, there is
A) incomplete crowding out. B) zero crowding out. C) complete crowding out. D) complete crowding in. E) either c or d
What is measured on the horizontal axis on the aggregate demand graph?
A. unemployment B. nominal income C. the price level D. real GDP per year