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) […]
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 […]
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 […]
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 […]
The nominal interest rate is 7 percent and the expected inflation rate is 4 percent. The real interest rate is: A) 10 percent. B) -2 percent. C) 3 percent. D) 4 percent. ANSWER C
Because it has a direct effect on the hiring decisions of firms, a change in business confidence has a much larger impact on the level of economic activity than does a change in consumer confidence. Indicate whether the statement is true or false ANSWER FALSE
The “minimum efficient scale” of operation in an industry is defined as: A) the smallest plant size that can be operated by firms in the industry. B) the scale of operation at which economies of scale are exhausted. C) the smallest number of firms that could effectively meet demand for an industry’s output. D) the […]
You are given the following consumption function C = 50 + .80YD. What is the amount of autonomous consumption expenditures? A) 75 B) 100 C) 5 D) 50 ANSWER D
Which of the following statements regarding OPEC is false? A) Because it sells a homogeneous product, since its formation in 1960 OPEC has been the clear leader when it comes to determining the price of crude oil. B) OPEC’s membership includes countries from the Middle East, Africa, and South America. C) Over time, OPEC’s ability […]
In which of the following situations would consideration of the minimum efficient scale of operation suggest that the market should be served by a single firm 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 […]
