When a transfer price is set higher
a. the buying division will chose to purchase less from the selling division
b. the buying division will chose to purchase more from the selling division
c. the selling division will chose to purchase less from the buying division
d. the selling division will chose to purchase more from the buying division
a
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Consumers must understand the economist’s law of diminishing marginal utility in order to maximize their satisfaction.
Indicate whether the statement is true or false.
In the classical model, we assume there is no ongoing inflation, so there is no need to distinguish between the nominal interest rate and the real interest rate
a. True b. False
In general, the largest sources of revenue for state and local governments come from:
a. Sales taxes and property taxes b. Sales taxes and corporate taxes c. Property taxes and individual income taxes d. Individual income taxes and sales taxes
If marginal cost is increasing, what do we know about average cost?
A. Average cost is constant and always lower than marginal cost because of the law of decreasing marginal productivity. As more items are produced, marginal costs increase (the same as productivity decreasing), but average costs remain constant because the total number of items produced is also increasing. B. If marginal cost is increasing, average costs are rising. As the cost of the next item produced rises, the average cost of all items produced must also rise. C. If marginal cost is increasing, average costs could be rising, falling, or constant. The direction of average costs depends on whether marginal cost is higher or lower than average cost. D. If marginal cost is increasing, average costs are falling. Marginal costs only increase at very high levels of production. When items are mass-produced (because of economies of scale), their average costs always fall, even when marginal costs begin to increase.