Suppose the price level of a product is gradually declining due to fall in demand. When will a producer of this product decide to shut down in the short run?
A producer operating in this market will decide to stop production and shut down when the market price falls below his average variable cost of production. At this stage, staying in production means losing the fixed costs and not recovering all variable costs, and halting production means losing only the fixed costs.
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With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that
A) capital and labor are perfect substitutes. B) capital and labor must be used together in a certain proportion. C) capital is not productive. D) labor is not productive.
All of the following are true about the Wagner Act of 1935 except that it
a. prohibited unfair labor practices by unions b. was the most important piece of labor legislation in United States union history c. established that firms must accept unions as legitimate institutions in collective bargaining d. guaranteed the union's right to conduct elections freely among workers e. is regarded by unions as their Magna Carta