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
Assume an analyst has been hired to estimate the price elasticity of demand for hamburger (which sells for about $2.30 per pound) and filet mignon (which sells for about $20 per pound), respectively. Considering the different determinants of the price elasticity of demand and assuming the consumers in both markets have approximately the same incomes, […]
In which of the following situations would a firm be more likely to rely on a capital-intensive method of production? A) When the rate of technological innovation is low. B) When capital is relatively expensive. C) When the firm’s output cannot be produced using the assembly line method of production. D) When labor supply is […]
Which of the following would have the greatest positive impact on a country’s domestic economy? A) An increase in spending on imports from other countries. B) An increase in spending by foreigners on the country’s exports. C) A decrease in the confidence of foreign investors in the country’s economy. D) A decrease in the incomes […]
Which of the following is not an example of a noncooperative oligopoly model? A) The kinked demand curve model. B) The model of limit pricing. C) The prisoner’s dilemma game. D) The cartel model. ANSWER D
