When Little Furniture Company produces 100 chairs - its average variable cost is $25 . The marginal cost of the 101st chair is $22 . If the firm chooses to produce the 101st chair, what will happen to average variable cost? Explain
What will be an ideal response?
If the firm decides to produce the 101st chair, its average variable cost will fall because the marginal cost is lower than the average variable cost.
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Induced expenditure includes
A) consumption expenditure, government expenditure on goods and services, and imports. B) investment, consumption expenditures, and exports. C) consumption expenditure and exports. D) consumption expenditure and government expenditure on goods and services. E) consumption expenditure and imports.
Consider the Taylor rule for the target of the federal funds rate
Suppose the equilibrium real federal funds rate is 2 percent, the target rate of inflation is 3 percent, the current inflation rate is 3 percent, real GDP equals potential real GDP, and the weights are 1/2 for the inflation gap and the output gap. Using the Taylor rule, what does the target for the federal funds rate equal? Next, if the Federal Reserve lowered the target for the inflation rate to 1 percent, how much would the target for the federal funds rate change?
Each Federal Reserve Note bears a seal placed to the left of George Washington on the $1 bill that identifies the
a. discount rate b. legal reserve requirement c. federal funds rate d. value of M1 e. District Bank that issued it
Which of the following is true about the combination of mops and brooms represented by point E in Figure 1.3 and using PP1?
A. Point E is attainable only if more resources become available or technological advances are made. B. Point E is attainable if this economy uses more of its available resources. C. Point E is unattainable if this economy becomes more efficient. D. Point E is efficient now.