What is the purpose of producer goods?
a. They fulfill the basic needs of consumers.
b. They increase the future production capacities of firms.
c. They enable consumers to make something.
d. They provide food and lodging to employees of firms.
b. They increase the future production capacities of firms.
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Suppose hamburger is an inferior good, but not a Giffen good, for Bob. If the price of hamburgers increases,
A) the income effect is greater than the substitution effect. B) the income effect is smaller than the substitution effect. C) consumption of hamburger will increase. D) We are unable to judge the change of hamburger consumption.
A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?
a. average revenue exceeds marginal revenue b. marginal revenue exceeds average revenue c. average revenue is equal to marginal revenue d. revenue is always maximized along with profit
The principle of comparative advantage implies that
A. most people are harmed by trade. B. we should limit the extent to which people specialize. C. only wealthy countries ultimately can benefit from international trade. D. every country can benefit from international trade.
Fixed costs are
A) costs that never change. B) costs that a firm incurs even when output is zero. C) not actually costs since they do not affect the decisions of a firm. D) costs that increase at a constant rate when output increases.