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 […]
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. […]
Which of the following best describes the basic characteristics of noncooperative oligopoly models? A) Managers make decisions based on the strategy they think their rivals will pursue. B) Managers attempt to deliberately mislead their rivals regarding the strategy they will pursue. C) When making decisions, managers basically ignore the mutual interdependence that exists among rivals. […]
The rate of inflation measures the change in the relative prices of the goods and services produced in the macroeconomy over a specified period of time. Indicate whether the statement is true or false ANSWER FALSE
A labor-intensive method of production is one that: A) requires employees to work harder than they would in other occupations. B) relies exclusively on labor. C) relies on large quantities of labor and smaller quantities of capital equipment. D) combines a small but sophisticated labor force with a large amount of capital. ANSWER C
According to the kinked demand curve model, if an oligopolistic firm lowers its price, it should expect to see its total revenue: A) increase. B) stay the same. C) decrease D) cannot be determined without more information. ANSWER C
A production method that relies on large quantities of machines and equipment and smaller quantities of labor is referred to as a: A) variable-input-intensive method of production. B) labor-intensive method of production. C) technology-intensive method of production D) capital-intensive method of production. ANSWER D
Demand for a good will tend to be more price elastic if it exhibits which of the following characteristics? A) It accounts for a small part of the consumer’s total income. B) The good has many available substitutes. C) It is a non-durable (as opposed to a durable good). D) There is little time for […]
In the case of a short-run production function: A) all of the inputs are variable. B) the amount of labor employed is held constant. C) at least one of the inputs is fixed. D) all of the inputs are fixed. ANSWER C
If a country’s national government wants to stimulate spending in the economy, it should: A) decrease taxes and increase government spending. B) increase taxes and decrease government spending. C) increase taxes and government spending. D) decrease taxes and government spending. ANSWER A
