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Question: You are the manager of a clothing store. You notice that allowing free returns is costing a lot of money. You have to hire additional workers to process the returns. You have to reapply tags to clothing items. You have to restock clothing. So in order to increase profits, you update your store policy. It now says: "All returns are subject to a $10 processing fee."
(1) Describe what effect this has on the demand for your store's clothes.
(2) Therefore, what will have to happen to the price of your store's clothes?
(3) Would your plan be effective to increase profits? Your answer could include "yes", "no", or "maybe" as long as you provide a convincing explanation for why that is your answer.
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BudgetSurplus: The amount by which government revenues exceedgovernment expenditures in a given year. PublicDebt: The total accumulation of the FederalGovernment's total deficits and surpluses which have occurredthrough time.
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a. sketch the aggregate demand short-run aggregate supply and long-run aggregate supply of an economy in long-run
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