Suppose a company expects prices in general to rise by 5%, but the price of its product rises by 2%. How will the company respond to the price change?
A) It will increase production since it's getting a higher price for the product.
B) It will increase production more slowly since it's price is rising more slowly than average.
C) It will reduce production since it perceives a relative decline in the demand for its product.
D) It will stop production and shut down until prices rise more quickly.
C
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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.
Cyclical unemployment originates with an imbalance between injections and leakages, not the absolute size of injections or leakages.
Answer the following statement true (T) or false (F)