58) If, as shown in the diagram, the household still saves 350K when the interest rate increases to r' = 40%, then present consumption Cp is an) good and future consumption CF is a(n) good. A) normal; normal B) inferior, normal C) normal; inferior D) inferior; inferior E) inferior Giffen, inferior Giffen
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27) When economists say that a firm is a price taker they mean that A) the firm initially takes price as given and tries to influence it through advertising. B) the firm can alter its rate of production and sales without affecting the market price of the product. C) at the price prevailing in the market, the firm will be willing to sell an infinite quantity. D) the demand curve that the firm faces is perfectly inelastic. E) the firm can alter the market price as it changes its rate of production.
6. You are told that the economy is producing efficiently and has chosen to produce and consume 2 units of X and 22.5 units of Y. At this point on the production possibilities frontier, you can use calculus to obtain the opportunity cost of X as: A) 1.4 C) 3.0 D) 4.8 E) 5.0 F) 5.8 H) 6.4 I) 7.2 J) none of the above B) 2.8
31) It is a disadvantage of that retained profits are taxed twice. It is a disadvantage of _ that bad decisions are not checked by the need for consensus. A) a corporation, both a partnership and a sole proprietorship B) both a partnership and a sole proprietorship; a partnership C) a corporation; a sole proprietorship D) a sole proprietorship; both a partnership and a sole proprietorship E) both a corporation and a partnership; a sole proprietorship
24) Suppose John and Joe each have different production possibility frontiers; John specializes in cloth and Joe specializes in corn. John's island unexpectedly has exceptionally good weather, and suddenly he is twice as productive in the production of both corn and cloth. Select the best statement. A) There will be a change in what John and Joe specialize in, because John's opportunity cost of production will have risen. B) As a result, it is possible that John and Joe will switch what they specialize in. C) As a result, John will have an absolute advantage in both corn and cloth. D) This is an example of unemployed resources becoming employed. E) There will be no change in what John and Joe specialize in, because John's comparative advantage has not changed.
Clothing 14 Food 41) Suppose the economy is closed to trade and is operating at point E. The opportunity cost of food: A) cannot be determined B) is infinite since it is impossible to produce more food C) is greater than the opportunity cost of clothing D) is less than the opportunity cost of clothing E) is zero
3) In general, if country A is accumulating capital at a faster rate than country B, then country A A) is using a larger proportion of resources to produce consumption goods. B) will soon have a comparative advantage in the production of most goods. C) will have a production possibilities frontier that is shifting out faster than country B'o. D) will have more unemployment than country B. E) will have a higher rate of inflation than country B.
16. Assume consumers view cherries and apples as substitutes. If the price of cherries rises, the consumer will buy a fewer apples, thus increasing her marginal utility from apples. b. more apples, thus increasing her marginal utility from apples. c. less cherries, thus reducing her marginal utility from cherries. d. less cherries, thus increasing her marginal utility from cherries. e. b and c.
The figure below shows a family of cost curves for a firm. The subscripts 1, 2, and 3 for the SRATC curves refer to different plant sizes. LRAC SRATC3 SRATC2 SRATC Cost < D E 01 02 03 04 05 Output FIGURE 8-3 29) Refer to Figure 8-3. If this firm is producing at point B, then A) this firm is producing a level of output that is technically inefficient in the long run. B) this firm is experiencing decreasing returns to scale. C) this firm could produce the same level of output at a lower cost with plant size 2. D) it should employ more of its variable factors of production. E) plant size 1 is optimal.
10) A turnip is an inferior good if A) an increase in income decreases the demand for turnips. B) turnips are considered to be substitues for potatoes. C) turnips violate the law of demand. D) an increase in income increases the demand for turnips. E) an increase in the price of a turip decreases the quantity of turnips that consumers want to buy.
A5. If factor prices decrease, (A) (B) both the long-run and short-run average cost curves will shift downward. here will be a downward shift in the long-run average cost curve but not in the short-run average cost curve. a firm will move down along its long-run average cost curve only. a firm will move down along both its long-run and short-run average cost curves. there will be no change in the cost curves in the long run. (D) (E)
15. Inter-sectoral adjustment refers A. adjustment across sectors according to the relative mix of inputs used in production, and is primarily associated with the exploitation of economies of scale. B. adjustment within sectors according to the relative mix of inputs used in production, and is primarily associated with specialization according to comparative advantage. C. adjustment within sectors and is primarily associated with economies of scale. D. adjustment across sectors according to the relative mix of inputs used in production, and is primarily associated with specialization according to comparative advantage
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