Inflation affects production decisions because it
A. Causes businesses to be more cautious since the future appears more uncertain.
B. Causes businesses to focus more on the future.
C. Decreases input costs.
D. Reduces speculation.
Answer: A
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A perfectly competitive firm can be identified by the fact that
A. its average revenue equals its marginal revenue. B. it experiences diminishing marginal returns. C. it is making only accounting profits in the short run. D. there are other firms in the industry producing similar products.
How would economists interpret the following facts? Fact: Over the past two decades the relative price of new textbooks has risen dramatically. Another fact: Record numbers of new textbooks have been purchased by students over the past two decades
A) The law of demand has been violated. B) The law of supply has been violated. C) The supply and demand process in new textbooks hasn't worked correctly. D) The demand for textbooks has increased. E) The facts aren't true.
For the use of their capital in production, owners receive
a. wages. b. rent. c. interest. d. profit.
The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit. If the wage is $5 per hour, a 2 percent cut in all the workers' income tax will cause the firm to
A) demand less labor. B) demand more labor. C) raise the wage paid to the worker. D) None of above.