Thinking of a Gap store as a production plant, explain why Gap is making a decision to reduce the size of its stores. Is Gap's decision a long-run decision or a short-run decision?
What will be an ideal response?
Gap believes that its stores are too large and that it is operating where it has diseconomies of scale. By reducing the size of its plant (its stores) Gap can slide down its LRAC curve and decrease its average cost. Gap's decision is a long-run decision because it involves the size of the firm's plant.
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The U.S. Treasury is responsible for controlling the money supply and interest rates in the economy
Indicate whether the statement is true or false
Which of the following is true of government activities under a system of representative democracy?
a. If a majority favors an activity, it must be productive. b. If a majority opposes an activity, it must be counterproductive. c. When voters pay in proportion to benefits received, productive activities undertaken by the government will be favored by an overwhelming majority of voters. d. When voters pay in proportion to benefits received, productive activities will generally be defeated under a majority rule vote.