Explain why a decrease in an input price causes less of an increase in the quantity demanded of the factor if we assumed that product price remained constant
What will be an ideal response?
The input price decrease will lead to additional output that will lower the output price. As the market price declines each firm reduces its output. The total demand for the input will not be as great as when the output market price remains constant.
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Suppose that a firm earned $500,000 in total revenue. At the same time, it incurred labor costs of $200,000; economic depreciation of $50,000; normal profit of $75,000; interest paid to the bank of $25,000; and used other factors of production that
cost $100,000. The economic profit earned by the firm equals A) $275,000. B) $175,000. C) $50,000. D) $200,000. E) $500,000.
A firm enters into a consent decree to avoid an even greater legal setback. If the terms of the consent decree effectively double the firm's fixed costs, then
a. marginal cost more than doubles b. marginal cost doubles c. marginal cost remains unchanged d. average total cost remains unchanged e. average variable cost doubles
Which of the following refers to a short run phenomenon?
A. diminishing returns B. constant returns to scale C. economies of scale D. diseconomies of scale
If the economy is entering a recession, what should the Fed do as far as changing interest rates, and how should this affect consumer and business spending?
What will be an ideal response?