The price reduction effect of the sale of a firm's last ?Q units of output is:
A. the additional revenue from selling ?Q units at price P(Q).
B. the reduced revenue from selling (Q - ?Q) units at a lower price of P(Q).
C. the additional revenue from selling ?Q units at price P(Q + ?Q).
D. the reduced revenue from selling (Q - ?Q) units at a lower price of P(Q - ?Q).
B. the reduced revenue from selling (Q - ?Q) units at a lower price of P(Q).
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Contractionary fiscal policy:
What will be an ideal response?
Sharon pays a tax of $4,000 on her income of $40,000, while Brad pays a tax of $1,000 on his income of $20,000. This tax is:
A. regressive. B. progressive. C. proportional. D. a flat tax.
The law of diminishing marginal returns
A. results in average variable cost (AVC), average total cost (ATC), and marginal cost (MC) curves eventually increasing at an increasing rate. B. causes average fixed costs to decline continuously as output increases. C. causes the difference between average total cost and average variable cost to shrink as output increases. D. results in MC but not ATC curves eventually increasing at an increasing rate.
Describe the relationship between the size of the MPC and the multiplier. How does it compare to the relationship between the size of the MPS and the multiplier?
What will be an ideal response?