Hot dogs and hot dog buns would be expected to have: A) positive income elasticities of demand with respect to each other. B) negative income elasticities of demand with respect to each other. C) a positive cross-price elasticity of demand. D) a negative cross-price elasticity of demand. ANSWER D
Date: September 10th, 2020
Assume the firms in an oligopoly produce a differentiated product and are initially colluding. If each firm begins to cheat (to increase sales) by underpricing the other firms, as the amount of cheating increases, the resulting industry price and output will approach the outcome for: A) perfect competition. B) monopolistic competition. C) noncooperative monopoly. D) […]
Date: September 10th, 2020
Which of the following would cause a firm’s LRAC curve to shift up? A) An increase in the amount of “learning by doing.” B) An increase in the price of labor, all else constant. C) An increase in the amount of output produced by the firm. D) A decrease in the amount of capital employed […]
Date: September 10th, 2020
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
Date: September 10th, 2020
All else constant, an improvement in technology at each scale of operation would cause: A) a movement up an industry’s LRAC curve. B) a movement down an industry’s LRAC curve. C) an upward shift of an industry’s LRAC curve. D) a downward shift of an industry’s LRAC curve. ANSWER D
Date: September 10th, 2020
All else constant, an increase in the amount of borrowing by the federal government would reduce the amount of money available for businesses to borrow to finance investment spending. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
Which of following is not a condition that must be met for a cartel to maximize its joint profits? A) Total output by the cartel must be allocated among the member firms such that the individual firm’s marginal costs are equal. B) The cartel must produce the level of output at which its marginal revenues […]
Date: September 10th, 2020
For a normal good, the income elasticity of demand is: A) positive or negative depending on the share of income accounted for by the good. B) always equal to 1. C) positive if income increases and negative when income declines. D) always positive. ANSWER D
Date: September 10th, 2020
Suppose a consumer’s income increases from $30,000 to $36,000. As a result, the consumer increases her purchases of compact disks (CDs) from 25 CDs to 30 CDs. What is the consumer’s income elasticity of demand for CDs? A) 0.5 B) 1.0 C) 1.5 D) 2.0 ANSWER B
Date: September 10th, 2020
If government spending exceeds the amount of taxes collected from households and businesses, the government simply finances the difference by printing more money. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
