"Higher prices always yield higher revenues." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. Higher prices generate higher revenues if demand is inelastic but generate lower revenues if demand is elastic. The effect of a price change on revenues depends on whether demand is elastic or inelastic.
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The slope of the per person production function is
A) the marginal product of labor. B) the marginal product of capital. C) lower for a poor country than for a rich country. D) higher for a rich country than for a poor country.
Average fixed costs
A) are always rising with increases in production B) are dependent on marginal costs. C) are dependent on average variable costs. D) are always falling with increases in production.
For the level of output, Q, firm profit is the same whether measured by TR – TC or (AR – AVC) * Q
Indicate whether the statement is true or false
A lender expects to earn a real interest rate of 4.5% over the next 12 months. She charges a 9.25% (annual) nominal rate for a 12-month loan. What inflation rate is she expecting? If the lender is in a 30% marginal tax bracket, the borrower in a 25% marginal tax bracket, and they both have the same inflation expectations, what are the real after-tax rates each expects?
What will be an ideal response?