The opportunity costs of the firm using its own funds are measured by the: A) market interest rate. B) inflation rate. C) price level. D) menu costs. ANSWER A
Date: September 10th, 2020
Taxes levied on a firm’s earnings ________ the effective cost of funds. A) lower B) raise C) have no effect D) none of the above ANSWER B
Date: September 10th, 2020
Which of the following is not cited as one of the factors that accounts for the large-scale production that exists in many sectors of the economy? A) Economies of scale. B) Advertising and image differentiation. C) The minimum efficient scale of operation in many industries is quite high relative to market demand. D) Risk spreading. […]
Date: September 10th, 2020
List and describe the sources of spending in the economy by focusing on the four major sectors of the economy. What will be an ideal response? ANSWER The four major sources of spending in the economy include consumption spending, which is spending by households on durable and non-durable goods and services; gross private domestic […]
Date: September 10th, 2020
In which of the following situations would the minimum efficient scale of operation provide little or no guidance regarding how many firms should serve the market to minimize production costs? A) When the LRAC curve slopes downward over the relevant range of output. B) When the LRAC curve hits its minimum point at a relatively […]
Date: September 10th, 2020
The slope of the budget constraint: A) changes as the marginal rate of substitution changes. B) is the ratio of the prices of the two goods. C) is the ratio of the budget to total utility. D) equals one, since the consumer can purchase any combination along the budget constraint. ANSWER B
Date: September 10th, 2020
An index based on a mail survey of 5,000 households by the Conference Board that measures households’ perceptions of general business conditions, available jobs in the households’ local area, and expected personal family income in the coming six months is called the: A) Consumer Sentiment Index. B) Consumer Confidence Index. C) Consumer Satisfaction Index. D) […]
Date: September 10th, 2020
Explain the basic distinction between microeconomic analysis and macroeconomic analysis. Describe the types of issues that each branch of analysis focuses on. What will be an ideal response? ANSWER Microeconomic analysis focuses on the behavior of individuals, e.g., consumers and firms. It is concerned with such issues as how a firm can produce output […]
Date: September 10th, 2020
An indifference curve is negatively-sloped because: A) utility is a subjective concept. B) as the consumer obtains additional units of one good, the consumer is willing to sacrifice increasing amounts of the other good. C) in order to remain at the same level of utility, if an individual gets more of one good, he must […]
Date: September 10th, 2020
Consider two goods, X and Y, where X is measured on the horizontal axis and Y is measured on the vertical axis. All else constant, a decrease in the price of X will cause the consumer’s budget constraint to: A) rotate in along the X axis B) rotate out along the X axis. C) shift […]
Date: September 10th, 2020
