Describe the functions of money
The three main functions of money are to serve (1) as a measure of value, (2) a store of value, and (3) a
medium of exchange. As a measure of value, we use money to indicate the relative value of different
goods. As a store of value, we use money to store purchasing power for future use. As a medium of
exchange, we use money to overcome the lack of a double coincidence of wants.
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When the government chooses to use resources to build a dam, these sources are no longer available to build a highway. This choice illustrates the concept of
A) a market mechanism. B) macroeconomics. C) opportunity cost. D) a fallacy of composition.
A decrease in supply will cause the smallest increase in price when
a. both supply and demand are inelastic. b. demand is elastic and supply is inelastic. c. both supply and demand are elastic. d. demand is inelastic and supply is elastic.
If a firm is producing at the kink in its demand curve and it decides to decrease its price, according to the kinked demand model
A. It will lose market share, but its profits will decrease. B. It will gain market share. C. It will lose market share to the firms that do not follow the price decrease. D. Its market share will not be affected.
An increase in wages will shift the supply curve up and to the left.
Answer the following statement true (T) or false (F)