Answer the following statement(s) true (T) or false (F)
1. All cost increases are passed on to a firm's customers in the form of higher prices.
2. Higher fixed costs may cause a firm to shut down its operations but will not otherwise affect its production and pricing decisions.
3. Either a rise in marginal cost or a fall in marginal revenue could cause a firm to reduce its output.
4. Higher fuel costs would cause a delivery firm to raise the price it charges.
5. Higher insurance costs would cause a delivery firm to raise the price it charges.
1. False
2. True
3. True
4. True
5. False
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The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of
a. medical advances that provide new, better, but often more expensive medical treatments. b. a rising population of the elderly in the economy. c. health insurance reform that will include government subsidies for health insurance for many low-to-moderate income families. d. All of the above are important factors.
The single largest expenditure by state and local governments is on
a. highways. b. police. c. public welfare. d. education.