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. […]
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 […]
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 […]
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 […]
When the government decides to impose a tax on sellers of a good or service, sellers try to pass the tax on to consumers by raising the price of the good being sold. Assume the government decides to place a $1 tax on each unit of a good sold, e.g., tires. Using the simple model […]
An improvement in technology would cause each of the isoquants in a firm’s isoquant map to shift out away from the origin. Indicate whether the statement is true or false ANSWER FALSE
Assume there is a simultaneous decrease in the cost of batteries used in hybrid cars and a shift in consumer preferences toward more fuel-efficient vehicles. Based on this, we can conclude, with certainty, that in the market for hybrid cars, equilibrium: A) price will decrease. B) price will increase. C) quantity will decrease. D) quantity […]
An increase in stock prices ________ the size of people’s wealth and may ________ their willingness to spend, everything else held constant. A) increases; increase B) increases; decrease C) decreases; increase D) decreases; decrease ANSWER A
The slope of the linear consumption function represents autonomous consumption expenditures. Indicate whether the statement is true or false ANSWER FALSE
In the foreign exchange market, foreign residents wishing to purchase U.S. exports or U.S. real and financial assets must: A) demand U.S. dollars by supplying their foreign currency. B) demand U.S. dollars by supplying U.S. dollars. C) supply U.S. dollars by demanding their foreign currency. D) none of the above. ANSWER A
