During the short-run period of the production process, a firm will be:
a. unable to vary any of its factors of production.
b. able to vary some of its factors of production.
c. able to vary all of its factors of production.
d. able to vary the size of its plant.
b
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According to the supply-side view of fiscal policy, if the impact on tax revenues is the same, does it make any difference whether the government cuts taxes in a way that reduces marginal tax rates or in a way that does not reduce marginal tax rates? a. No; both actions will exert the same impact on aggregate supply and demand
b. Yes; only lower marginal tax rates will increase the incentive to earn income and thereby stimulate aggregate supply. c. No; in both cases people will increase their saving in the expectation of higher future taxes and thereby offset the stimulus effect of lower taxes. d. Yes; interest rates will increase if marginal tax rates are lowered, whereas they will tend to decrease if marginal tax rates are left unchanged.
The demand for Godiva mint chocolates is likely quite elastic because
a. there are many close substitutes. b. this particular type of chocolate is viewed as a luxury by many chocolate lovers. c. the market is narrowly defined. d. All of the above are correct.
The price paid by buyers in a market will decrease if the government
a. imposes a binding price floor in that market. b. increases a binding price ceiling in that market. c. increases a tax on the good sold in that market. d. decreases a binding price floor in that market.
Last year the price level increased from 118 to 122. The increase in the price level leads to a decrease in
A) potential GDP. B) the money wage rate. C) the buying power of money. D) the real interest rate. E) the price of domestic goods and services relative to foreign goods and services.