What might cause diseconomies of scale as a small accounting firm becomes more successful?
a. Staff and equipment requirements rise or fall in step as client needs increase or decrease.
b. The rising number of clients creates efficiencies and lowers the average cost for services.
c. Hiring and training additional employees creates opportunities for staff specialization.
d. An increase in the number of clients it serves overwhelms the firm’s management systems.
d. An increase in the number of clients it serves overwhelms the firm’s management systems.
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What would be an optimal tax on pollution (a negative externality)?
a) one for which producers internalize the cost of the pollution b) one for which a benevolent social planner is able to maximize production c) one for which producers choose not to produce any pollution d) one for which the value to consumers at market equilibrium exceeds the cost of production (including tax)
In the case of purely flexible exchange rates, a decrease in domestic real income, with constant prices and domestic credit, will lead to
A) an increase in international reserves. B) the depreciation of the domestic currency. C) the appreciation of the domestic currency. D) no change in the value of the domestic currency.