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 […]
An increase in interest rates might ________ saving because more can be earned in interest income. A) encourage B) discourage C) disallow D) invalidate ANSWER A
The marginal propensity to consume plus the marginal propensity to invest equal one. Indicate whether the statement is true or false ANSWER FALSE
Over the past several decades, technological change has led to a significant amount of consolidation in the U.S. brewing industry. Indicate whether the statement is true or false ANSWER TRUE
Explain why the price elasticity of demand varies along a demand curve, even if the demand curve is linear. What will be an ideal response? ANSWER As we move down a demand curve, the percentage change in price (quantity) varies. When price is relatively high, a one unit change in price is small in […]
When measuring the actual output produced in an economy, one should focus on GDP measured in nominal terms. Indicate whether the statement is true or false ANSWER FALSE
A trade deficit means: A) the country has positive net savings, which it lends abroad. B) the country has negative net savings, which it lends abroad. C) the country has positive net savings, which it borrows from abroad. D) the country has negative net savings, which it borrows from abroad. ANSWER D
Assuming there is a rise in supply of copper, if the market for copper is allowed to adjust, the ultimate result will be: A) an increase in price and an increase in the quantity demanded. B) an increase in price and an increase in the quantity supplied. C) a decrease in price and an increase […]
Everything else held constant, an increase in interest rates on student loans A) increases the cost of a college education. B) reduces the cost of a college education. C) has no effect on educational costs. D) increases costs for students with no loans. ANSWER A
