Changes in the macroeconomy, such as an increase in average per person income, can have effects at the microeconomic level, for example, on the profitability of firms in a particular industry. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
As the percentage of the consumer’s income accounted for by a particular good decreases, demand for the good will: A) tend to become more price elastic. B) tend to become more price inelastic. C) tend to become closer to unit elastic. D) tend toward being perfectly elastic. ANSWER B
Date: September 10th, 2020
The evidence on the potential for input substitution in the service sector suggests that: A) there may be more opportunities for input substitution than was previously thought, especially in areas such as health care, financial services, and the even the fine arts. B) the traditional view that the potential for input substitution is extremely limited […]
Date: September 10th, 2020
Which of the following is cited as a problem with the kinked demand curve model? A) It assumes that firms do not attempt to maximize profits. B) It assumes that firms determine the profit-maximizing level of output by equating marginal cost and average variable cost. C) It does not explain how the equilibrium market price […]
Date: September 10th, 2020
If the consumer has a great deal of time to adjust to an increase in the price of gasoline, which of the following is correct? A) Quantity demanded will be relatively sensitive to the change in price. B) The percentage change in quantity demanded will be quite small relative to the percentage change in price. […]
Date: September 10th, 2020
With respect to prices, at the macroeconomic level attention is focused on relative prices, while at the microeconomic level attention is focused on absolute prices. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
Why is the prisoner’s dilemma game useful in studying oligopoly behavior? A) Because oligopolies make out like bandits. B) To illustrate the problems encountered when making decisions under uncertainty. C) To show that oligopolies behave as monopolists in the long run and earn positive economic profits. D) To illustrate how barriers to entry lead to […]
Date: September 10th, 2020
All else constant, as the price of petroleum increases relative to the prices of other inputs to the production process, in their effort to minimize their total costs of production, we can expect to see firms employ: A) less of each of the inputs of production. B) more petroleum and less of the other inputs […]
Date: September 10th, 2020
Assume a firm uses two inputs, capital and labor. All else constant, an increase in the price of labor would create an incentive for the firm to: A) substitute labor for capital in its production function. B) substitute capital for labor in its production function. C) hire more capital and labor. D) hire less capital […]
Date: September 10th, 2020
Managerial economics refers to the application of microeconomics to business decision making. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
