Thomas Edison once complained that he was not making a profit selling light bulbs because his plants were operating 25 percent below capacity. He estimated that he could increase output 25 percent with a 2 percent increase in the cost of production. He sold the 25 percent on the foreign market at a price below what he called the "cost of production." We can deduce that Edison really meant
a. Marginal cost was below average cost but less than marginal revenue.
b. Average cost exceeded variable cost, which exceeded marginal revenue.
c. Variable cost exceeded fixed cost but was less than marginal revenue.
d. Marginal cost was above average cost but greater than marginal revenue.
a
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Expenditures in GDP do not include
A) used goods or financial assets. B) financial assets or investment. C) used goods or investment. D) investment, stocks, or bonds. E) government expenditures on goods and services.
The study of the aggregate economic variables is
A) macroeconomics. B) microeconomics. C) positive economics. D) normative economics.
The largest component of GDP as measured by the expenditure approach is:
a. wages and salary earnings. b. personal consumption. c. net profits of corporations. d. gross private investment.
Supply curves are usually assumed to slope upward because
a. profits fall as prices rise b. a higher price leads to increases in demand c. a higher price leads to decreases in demand d. a higher price attracts resources from other less valued uses e. firms drop out of the market as prices rise