Explain why a voluntary production quota is difficult to operate
What will be an ideal response?
A voluntary quota is difficult to operate because a production quota results in a massive incentive to "cheat" on the production quota by increasing production. A production quota decreases the quantity produced. By decreasing the quantity produced, a production quota raises the price and reduces the marginal social cost of the last unit produced. Because the price exceeds the marginal social cost, producers have an incentive to increase their production (beyond the quota amount) to boost their profit.
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What happens to the demand curve when a nonprice determinant of demand changes?
A. The demand curve shifts horizontally. B. There is a movement along the demand curve. C. The consumer moves to a different price point. D. Nothing changes with the demand curve.
A decrease in the price of a firm's output will shift the firm's demand curve for labor to the right, other things being equal
a. True b. False Indicate whether the statement is true or false
In the three-step method for monopolistic competition, which of the following is accomplished in step 1?
a. finding the marginal revenue b. finding the total costs c. finding the total revenue d. finding the profit maximizing output level
What does not cause a direct increase in consumption spending
What will be an ideal response?