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Financial Economies:
These are benefits obtained by large firms as a result of contracting credit from financial institutions at lower interest rates than smaller firms. The fact is that the large firms can provide collateral securities for such loans and their mere sizes alone make them credit-worthy as compared to smaller firms. In addition to borrowing from financial institutions, large firms can easily float shares in the stock market. At times suppliers of materials to large firms may give them out on credit. This is a sort of pre-financing of the firm’s activity. All these advantages lead to the lower per unit cost of output produced.
Market intervention by government Government intervenes in various degrees in different countries. Free economy is almost non-existent in the modem world. In real world, the form,
What is the theory of second best? Prove the theorem with the help of a diagram
What is the substitution effect?
If the average variable cost curve is horizontal, what is the shape of the short-run marginal cost curve? What shape would the short-run average cost curve be?
If we have two products, A and B, which are substitutes, we can expect that a rise in the price of A (or B) will cause the demand for B (or A) to go up.” Examine this statement wit
Q. Defien Hyper - Inflation? Hyper-Inflation:It's a situation of extremely rapid inflation (reaching 100% per year or more), frequently resulting from a condition of political
Economic Rent - Economic rent is difference between what firms are willing to pay for the input less the minimum amount required to obtain it. * An Example - There are tw
If the price of that cup of teh-tarik has increased in such an amount,economists may not necessarily conclude that the country is going throungh inflation.why is that so?
explain the difference between traditional theory and modern theory of cost
Suppose that a firm’s production function is given by Q=30L-3L2, where L is labor input and Q is the output. a) Derive and draw the firm’s demand for labor while the firm’s produc
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