Thinking of a Gap store as a production plant, explain why Gap is making a decision to reduce the size of its stores. Is Gap's decision a long-run decision or a short-run decision?
What will be an ideal response?
Gap believes that its stores are too large and that it is operating where it has diseconomies of scale. By reducing the size of its plant (its stores) Gap can slide down its LRAC curve and decrease its average cost. Gap's decision is a long-run decision because it involves the size of the firm's plant.
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Suppose Pat's Paints is a perfectly competitive firm. If Pat's Paints' marginal revenue equals $5 per can, and Pat decides to sell 100 cans of paint, Pat's total revenue equals
A) $5. B) $100. C) $500. D) $20. E) Information on the price of a can of paint is needed to answer the question.
At a short-run macroeconomic equilibrium, real GDP is always equal to potential GDP
Indicate whether the statement is true or false
Mr. Pierpont has wealth of $200,000. He wants to keep at least $80,000 in bonds at all times, and will shift $10,000 into bonds from his checking account for each percentage point that the interest rate on bonds exceeds the interest rate on his
checking account. If the interest rate on checking accounts is 4% and the interest rate on bonds is 9%, how much does Mr. Pierpont keep in his checking account? A) $50,000 B) $70,000 C) $130,000 D) $150,000
A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account. A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.Refer to the above figures. A positive externality exists that has not been corrected. Price and quantity will be
A. P1 and Q1. B. P2 and Q2. C. P3 and Q3. D. P4 and Q4.