Over the past couple of years, prices for personal computers have fallen dramatically, but suppliers have offered more and more of them for sale. Does this refute the law of supply? Explain
No. The price has fallen in response to the increase in supply of personal computers, which was caused by
technological innovation.
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Which of the following is NOT a reason for average costs to fall according to the learning curve?
A) Workers accomplish tasks more quickly after doing the task a few times. B) Managers schedule more efficiently over time. C) Engineers determine more accurately what tolerances can be used. D) Suppliers may become better able to produce the exact inputs the firm needs. E) Competing firms leave the industry as the learning firm becomes more efficient.
If an investment project costing $2,800 was expected to yield $1,000 (to be received at year end) for each of the next three years, a profit-maximizing entrepreneur would
a. definitely undertake the project. b. never undertake the project. c. undertake the project if the interest rate was low enough. d. undertake the project if the interest rate exceeded 12 percent.