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
The marginal propensity to save is defined as: A) ΔC/ΔYd. B) ΔS/ΔYd. C) ΔYd/ΔC. D) ΔYd/ΔS. ANSWER B
Date: September 10th, 2020
Which of the following would make it easier to maintain an effective collusive agreement in a cartel? A) An increase in the number of potential entrants into the industry. B) A decrease in the elasticity of demand for the cartel’s product. C) An increase in the number of substitutes for the product produced by the […]
Date: September 10th, 2020
If the cross-price elasticity of demand between two goods is positive, we can assume that the two goods in question are: A) complements. B) substitutes. C) inferior goods. D) totally unrelated to one another. ANSWER B
Date: September 10th, 2020
The list of the major factors that create economies of scale includes all of the following except: A) specialization and division of labor. B) quantity discounts. C) an increase in demand for the firm’s output. D) the use of automation devices. ANSWER C
Date: September 10th, 2020
All else constant, an increase in the amount of government spending on roads and bridges would cause GDP in the domestic economy to increase. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
Consumer income can be used for three things: purchases of goods and services, paying taxes and saving. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
