Assume that, over time, engineers develop new residential furnaces that can run on different types of fuels, e.g., natural gas, electricity, propane, and fuel oil, simply by flipping a switch on the furnace. How would this technological change affect the price elasticity of demand for natural gas? Why? ANSWER The price elasticity of demand […]
As the price of labor increases relative to the price of capital, the firm will move to a more labor-intensive production method to minimize costs. Indicate whether the statement is true or false ANSWER FALSE
A record of all transactions between residents of the reporting country and residents of the rest of the world over a period of time is called the: A) national income product accounts. B) balance of payments accounting system. C) accrual accounting system. D) none of the above. ANSWER B
Assume that, for a particular demand curve, when price rises from $50 to $60, total revenue falls from $8,750 to $7800. a. Based on this information, what is the quantity demanded at each price. b. Without calculating the coefficient of elasticity, is demand over this range elastic or inelastic? How do you know? ANSWER […]
Consumer confidence is measured by two indices: the Consumer Sentiment Index and the Consumer Confidence Index. Indicate whether the statement is true or false ANSWER TRUE
If the inputs to a production process are perfect complements, the firm can choose from a virtually infinite array of combinations of the two inputs to minimize the costs of producing a given level of output. Indicate whether the statement is true or false ANSWER FALSE
The current flows of goods, services, investment income, and unilateral transfers between a country and the rest of the world is called the: A) current account. B) financial account. C) national income product account. D) none of the above. ANSWER A
Assume the technology for producing personal computers improves and, at the same time, individuals discover new uses for personal computers so that there is greater utilization of personal computers. Which of the following will happen to equilibrium price and equilibrium quantity? A) Price will increase; quantity cannot be determined. B) Price will decrease; quantity cannot […]
The suggestion that a seller will try to set price based on “what the market will bear” is explicit recognition of the constraint imposed by: A) the firm’s marginal cost of production. B) the price elasticity of demand for that item. C) the firm’s competitors. D) the need for most firms to earn positive economic […]
The difference between interest income or receipts earned on investments in the rest of the world by the residents of a given country and the payments to foreigners on investments they have made in a given country is called: A) unilateral transfers. B) net investment income. C) capital expenditures. D) none of the above. […]
