Assume an individual is currently using all of his income to consume two goods — X and Y. If the prices of X and Y are $3 and $8, respectively, and the marginal rate of substitution of X for Y is four, is this individual maximizing his net benefits from consumption? If not, what should […]
Date: September 10th, 2020
When the marginal revenue resulting from a decrease in price is negative, demand for the product is: A) elastic. B) unit elastic. C) inelastic. D) cannot be determined without more information. ANSWER C
Date: September 10th, 2020
Assuming the demand curve is downward sloping, as price increases, the price elasticity of demand for a good (in absolute value) and marginal revenue: A) increase. B) stay the same. C) decrease. D) cannot be determined. ANSWER A
Date: September 10th, 2020
The role of the costs of capital is influenced by the degree to which firms can substitute capital for other inputs of production known as relative prices. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
Business investment is usually more volatile than overall economic growth. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
All of the following are limitations of direct consumer surveys except: A) the possibility that consumers’ responses may not reflect their actual behavior in the market place. B) the possibility of response biases because survey respondents may not want to reveal their true preferences. C) the likelihood that respondents will deliberately and systematically mislead interviewers. […]
Date: September 10th, 2020
Assume there is a simultaneous decrease in the incomes of people in the market for new homes and a decrease in the wages paid to carpenters, plumbers, and electricians. All else constant, we can predict, with certainty, that in the market for new homes the equilibrium: A) quantity of new homes will decrease. B) quantity […]
Date: September 10th, 2020
Explain how labor resistance and political and legislative influences reduce the ability of firms to minimize their costs of production. What do the two have in common in this regard? What will be an ideal response? ANSWER Both labor resistance and political and legislative influences constrain the set of choices firm managers have when […]
Date: September 10th, 2020
Economists describe short-run decisions as “constrained” decisions, while long-run decisions are described as “planning” decisions. Referring to a firm’s short-run average cost function and long-run average cost function, explain this What will be an ideal response? ANSWER In the short run, at least one of the inputs in the firm’s production function is fixed […]
Date: September 10th, 2020
Fear of a major recession causes stock prices to fall, everything else held constant, which in turn causes consumer spending to A) increase. B) remain unchanged. C) decrease. D) cannot be determined. ANSWER C
Date: September 10th, 2020
