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In Perfect Competition, a Change in Fixed Cost

question 229

Essay

In perfect competition, a change in fixed cost:
A.will cause a change in the price in the short run.
B.will cause a change in output in the short run.
C.will encourage entry or exit in the long run so that price will change enough to leave firms earning zero profits.
D.will cause a change in variable cost, too.


Definitions:

MPC

Marginal Propensity to Consume, a measure that describes the proportion of an increase in income that gets spent on consumption rather than being saved.

Federal Budget Deficit

The financial situation in which the federal government's expenditures exceed its revenues in a given fiscal year.

National Debt

The total amount of money that a country's government has borrowed.

Taxes

Mandatory economic impositions or alternative kinds of charges placed on taxpayers by governmental bodies to finance state expenditure and diverse public costs.

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