What is meant by fixed cost? What kinds of things might be included in fixed cost?
What will be an ideal response?
Fixed cost is any cost that does not depend on the firm's level of output. These costs are incurred even if the firm is producing nothing. Examples would include payments on a long-term lease, insurance premiums, and contract obligations for some workers.
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Goods differ on the basis of whether their consumption is rival and excludable. Explain the terms "rival," nonrival," "excludable," and "nonexcludable" as they are used to define goods
List the four categories of goods and define these categories in terms of rivalry and excludability.
According to real business cycle theory, the primary causes of business cycles are
A) shocks to aggregate demand. B) monetary factors. C) technology shocks. D) waves of self-fulfilling optimism and pessimism.
A vertical demand curve has
A) infinite elasticity. B) positive elasticity. C) zero elasticity. D) negative elasticity.
A Pigouvian subsidy
A. cannot exist with externalities. B. is the same thing as a Pigouvian tax. C. is measured in terms of Pigouvian dollars. D. moves production to the socially optimal level of output.