Author Question: Profit maximization A) makes a firm become as large as possible. B) makes a firm remain small in ... (Read 172 times)

Bob-Dole · **on:** Jun 29, 2018

Profit maximization

A) makes a firm become as large as possible.
B) makes a firm remain small in the long run.
C) increases the likelihood that a firm will survive.
D) leads a firm to become the target of a takeover.

Question 2

List and compare the four components of the expenditure approach to calculating GDP.

What will be an ideal response?

alexanderhamilton · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

The 4 parts can be summarized according to the formula GDP = C + I + G + (X - M). The first part, C, is consumption expenditure, which measures household spending and is the largest component accounting for around 70 percent of GDP. The next category, I, is investment and refers to the purchase of new capital, the purchase of new homes and changes in inventories. This fluctuates a great deal but generally accounts for 15 to 20 percent of GDP. Next is G, which government expenditure on goods and services. This component includes purchases by all levels of government on new goods and services and is about 20 percent of GDP. The final category,
(X - M), is net exports. In it, exports are added and imports are subtracted. This component is typically negative in the United States because we typically run a trade deficit. It is generally around -1 to -5 percent or so of GDP.