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A decrease in the real interest rate will reduce the cost of borrowing for firms, so these firms will tend to borrow more to finance investment. There may also be a consumption effect if consumers decide ...

The circular flow of income shows the flows of money between households and firms. Money flows from consumers to firms through consumer spending. Conversely, households recieve an income through a firm's ...

Economies of scale are essentially the cost advantages that a firm can gain by expanding its output. Economies of scale reduce the long run average cost per unit when output expands. It is important to no...

A detailed answer to this question would start by defining and explaining the economic term - scarcity and establishing the relationship between our infinite needs and wants and finite resources. This wou...

Price elasticity of demand (PED) measures the responsiveness of demand in relation to a change in price. The formula for PED is %change in quantity demand / %change in price.

If a good has an elast...