Laronda went into the business of producing and selling greeting cards. For this business, which of the following is likely to be a fixed cost?
a. paper costs
b. labor costs
c. the 6-month lease for the factory
d. long distance telephone costs
c. the 6 month lease for the factory
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If the slope of the aggregate expenditure curve is 0.5, then the expenditure multiplier equals
A) 5. B) 0.5. C) 2. D) 3. E) 4.
A problem with pollution charges or taxes as a solution to pollution is that
A) people don't want the government to regulate industry. B) the necessary information about the polluting industry is costly and usually unavailable. C) taxes are already too high. D) pollution would still continue. E) the producers do not want the property right to their pollution.
The application of rational expectations to the permanent-income hypothesis implies that information contained in
A) only past income levels will determine permanent income. B) only past income levels will determine transitory income. C) only new changes in income that are unanticipated can change permanent income. D) only new changes in income that are anticipated can change permanent income.
In the long-run, firms in a monopolistically competitive industry will
a. earn substantial economic profits b. tend to just cover costs, including normal profits c. seek to increase the scale of operations d. seek to reduce the scale of operations