How might Gap take advantage of economies of scale by combining concept stores into one store?
What will be an ideal response?
At 12,500 square feet Gap's stores were too large and Gap was incurring diseconomies of scale. When Gap combines its separate Gap concept stores into a smaller space, Gap will use fewer resources, particularly less capital and less labor. Gap's costs will be less as a result. Additionally Gap's sales will be less but the proportionate decrease in cost will exceed the decrease in Gap's production. In this case Gap's average costs will decrease so that Gap can reap economies of scale it currently is not enjoying.
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The long-run aggregate supply curve is vertical
Indicate whether the statement is true or false
The term marginal utility denotes the amount by which ________ changes when consumption changes by ________ unit(s).
A. demand; 10 B. total utility; 10 C. total utility; 1 D. demand; 1
Using the expenditure approach, gross domestic product equals:
A. gross national product. B. the sum of consumption, investment, government purchases. C. the sum of consumption, investment, government purchases, and net exports. D. gross national product minus net exports.
In the extreme case of a complete crowding-out effect
A. an increase in government spending will stimulate investment spending. B. an increase in tax rates will stimulate work effort. C. an increase in government spending will not increase aggregate demand. D. an increase in interest rates will stimulate investment spending.