To maximize joint profits, a cartel must determine the level of output at which: A) joint marginal revenue equals the marginal cost of the largest member of the cartel. B) marginal revenue equals joint marginal cost. C) the horizontally sum of the members marginal cost curves is at a minimum. D) joint marginal revenue equals […]
When a demand curve is perfectly elastic: A) marginal revenue = average revenue = price. B) marginal revenue > average revenue = price. C) marginal revenue < average revenue = price. D) marginal revenue > average revenue > price. ANSWER A
Which of the following statements is correct for the case of a downward-sloping demand curve (beyond the first unit of output)? A) P = AR = MR B) P = AR > MR C) P > AR > MR D) P = AR < MR ANSWER B
For the U.S. economy, the largest expenditure category is: A) government expenditures. B) net export expenditures. C) personal consumption expenditures. D) investment expenditures. ANSWER C
Measuring expenditures and income with the price level allowed to vary, so that changes in these values represent changes in either the actual amount of goods, services, and income or changes in the price level or a combination of both factors is denoted in ________ terms. A) nominal B) real C) constant dollar D) all […]
If an industry is characterized by substantial diseconomies of scale, as a particular firm in the industry expands its production capacity we will observe: A) a decrease in marginal costs. B) an increase in the marginal product of labor. C) a decrease in the total fixed costs of production. D) an increase in the average […]
According to the circular flow model, an increase in spending by businesses on productive resources would cause the income and spending of consumers to increase. Indicate whether the statement is true or false ANSWER TRUE
As we move down a linear demand curve, the absolute value of the price elasticity of demand: A) increases. B) stays the same. C) decreases. D) cannot be determined without more information. ANSWER C
Measuring expenditures and income with the price level held constant, so that any changes in these values represent changes in the actual amount of goods, services, and income is denoted in ________ terms. A) nominal B) real C) constant dollar D) all of the above ANSWER B
Economies of scale are illustrated by: A) a downward sloping long-run average cost curve. B) a flat long-run average cost curve. C) an upward-sloping long-run average cost curve. D) a downward-sloping short-run average total cost curve. ANSWER A
