Using marginal analysis, explain why many restaurants and coffee shops offer low-cost refills on beverages (for example, a shop may charge $1.50 for a cup of coffee and only $.50 for a refill)
The cost of the beverage includes the cost of serving it, and of collecting and cleaning the cup or glass (or the cost of the cup, if it is disposable). The marginal cost of the refill is just the cost of the beverage itself, since the customer uses the same cup. Thus, the marginal cost of the refill is lower, and hence the profit-maximizing firm will charge a reduced price for it.
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The NBER describes a recession as
A) "a decrease in the standard of living for at least one year." B) "a decrease in potential GDP for at least six months." C) "a one year period with increases in the unemployment rate." D) "a period of significant decline in total output, income, employment, and trade, usually lasting from six months to a year." E) "a decrease in real GDP for two successive quarters."
If autonomous investment spending falls as a result of a decline in the expected rate of return on investment, GDP would not have to fall if the government __________ taxes or __________ government spending
A) increased; increased B) increased; decreased C) decreased; increased D) decreased; decreased