A Detroit business advertises, “The more we sell, the lower the price, and the lower the price, the more we sell.” This statement implies that the firm is experiencing
A. decreasing returns to scale.
B. constant returns to scale.
C. increasing returns to scale.
D. abnormal demand patterns.
Answer: C
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If firms increase their investment spending by $10 million, then the economy's equilibrium output rises by exactly $10 million
a. True b. False Indicate whether the statement is true or false
Suppose you operate in a monopolistically competitive market. If you sell your good at a price of $20 and your average cost of production is $15:
A. your market may be in long-run equilibrium. B. you cannot be in short-run equilibrium. C. you should expect competing firms to enter your market and shift the demand curve for your good to the left. D. you should expect competing firms to enter your market and shift the demand curve for your good to the right.
Patents stimulate technological advance by
A) allowing inventors to capture the economic rewards of their inventions. B) making capital more productive. C) providing information about the status of technical knowledge in the economy. D) enabling the government to determine which potential technological advances firms should pursue.
What role do households play in capital markets?
What will be an ideal response?