Give two specific reasons why quantity supplied is greater at a higher price.
What will be an ideal response?
ANS:
First, if a firm can make a profit at a given price, it will be inclined to produce more at a higher price and enhance its profit. Second, firms that cannot make a profit at a low price may be able to do so at a higher price and therefore will undertake production. In either case, total quantity supplied will be greater at a higher price.
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Assume you and your best friend set up a partnership and your lawyer tells you that as the owners, you could each stand to lose your personal wealth if the business goes bankrupt. This means a partnership
A) faces limited liability. B) has little chance of succeeding. C) faces unlimited liability. D) is not a good type of business to set up.
The demand for firewood is likely to be more elastic in the summer than in the winter
a. True b. False
A point inside a nation's production possibilities curve can represent:
a. a recession. b. an increase in population size. c. an economic growth. d. a technological advancement. e. an improvement in living standards.
Governments often choose to regulate monopolies, rather than break them up into smaller firms, because monopolies often are
a. entitled to economic profits b. very big and politically powerful c. more efficient producers d. providing useful goods and services that would not otherwise be provided e. heavily subsidized