Divya owns a small boutique in a busy neighborhood. She has been thinking of expanding her business hours and hiring a sales associate to work evenings and weekends. She sees on the news that the GDP is down and decides to hold off on expanding her business for the time being. Why?
What will be an ideal response?
A downward-moving GDP indicates problems with the economy. The GDP moves down because fewer goods are being produced and fewer services being sold. This means that the businesses that produce these goods and services will have less profit and may need to lay off workers. The change in income for these workers means that they will spend less money overall, which means she may not have enough customers to make the expansion worthwhile.
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Comment on the following statement: "In order for a natural monopoly to be present, economies of scale must be realized at a scale that is close to total demand in the market."
What will be an ideal response?
Marriott and Holiday Inn want to merge, but the resulting company would control 44 percent of the market for hotel rooms. They promise the Department of Justice that they will not raise room rates, if they are allowed to merge. Will the Department of Justice allow this merger? Explain using the Herfindahl- Hirschman index
If a company wants an employee to average about $14.00 per hour to produce 60 units per hour, in addition to a base salary of $7.00 per hour, what should be the incentive rate per hour?
A. $0.117 B. $8.54 C. $1.25 D. $0.333