If short-run marginal cost and average variable cost curves for a competitive firm are given by SMC = 2 + 4Q, and AVC = 2 + 2Q,
a)how many units of output will it produce at a market price of $10? (15 points)b)At what level of fixed cost will this firm earn zero economic profit?
What is real rate of return? The annual percentage of financial gain on an investment that has been prorated for inflation is known as the real rate of return. As a result, the real rate of return provides an accurate representation of the real purchasing power of the a given sum of money over time. The investor can calculate how much more of a nominal return seems to be real return by adjusting this same nominal return to account for inflation. Investors must account for the effects of additional factors, including such taxes and investing fees, in addition to adjusting for inflation, in order to calculate real returns on their investments or to make investment decisions. Subtracting this same nominal interestrate from the inflation rate yields the real rate of return.
1+real rate = (1+rate of return) / (1+inflation) 1 + real rate = (1+0.0645) / (1+0.032) 1 + Real Rate = 1.0315 Real Rate = 0.0315 = 3.15%
The increase in personal taxes (-$20 billion) would offset any increase in real GDP generated by the increase in private consumption ($20 billion). Nominal GDP can be affected and increase by $20 billion, but the effect would be given by an increase in general price level (inflation), not by an increase in real money.
