Is a firm economically inefficient if it can cut its costs by producing less? Why or why not?
What will be an ideal response?
Economic efficiency occurs when the firm produces a given level of output at the least cost. If a firm can decrease production costs by decreasing output, it is not necessarily economically inefficient. If it is producing the new level of output at the least possible cost, it is achieving economic efficiency.
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The spending multiplier is defined as:
a. the ratio of the change in equilibrium output to the initial change in spending. b. the change in initial spending divided by the change in personal income. c. 1 / (marginal propensity to consume). d. 1 / (1 ? marginal propensity to save).
Refer to the table above. If gross investment is $12 billion, the equilibrium level of GDP will be:
Refer to the table above. If gross investment is $12 billion, the equilibrium level of GDP will be:
A. $260 billion
B. $270 billion
C. $280 billion
D. $290 billion