When input prices are fixed, decreasing returns to scale implies that the long-run average cost curve is
a. downward sloping.
b. horizontal.
c. upward sloping.
d. U-shaped.
c. upward sloping.
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To reduce the principal-agent problem,
A) managers can take on more risk than they disclose to investors. B) managers can inflate profits on financial statements. C) boards-of-directors can tie the salaries of top management to the profitability of the firm. D) managers can hide liabilities by not disclosing them on financial statements.
Why do monopolistically competitive firms fail to reach productive efficiency?
a. They fail to produce enough output to reach the highest cost. b. They produce too much output to reach the highest cost. c. They fail to produce enough output to reach the lowest cost. d. They produce too much output to reach the lowest cost.
All other factors being constant, a reduction in price tends to cause which of the following?
A) an increase in supply and an increase in demand B) a reduction in supply and an increase in demand C) an increase in quantity supplied and a reduction in quantity demanded D) a reduction in quantity supplied and an increase in quantity demanded
The amount of labor a firm employs depends on
A) the market wage. B) the market price for the good produced. C) Both A and B. D) None of the above.