If your income rises by one percent and, as a result, you buy more steak, then steak is a(n)
A) substitute.
B) normal good.
C) complement.
D) inferior good.
Answer: B
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Revenue maximization occurs when a firm sells at a price
A) that is equal to its minimum average variable cost. B) where its marginal revenue is equal to its marginal cost. C) where its marginal revenue is zero. D) None of the above
A deadweight loss occurs as a result of a per-unit tax because: a. the government spends tax dollars less efficiently than do private citizens
b. there is a decline in output for units for which the marginal benefit exceeds the marginal cost. c. taxes cause an overproduction of output relative to the socially efficient level or production. d. a surplus is created.
The purchasing power of farmers is determined by the
a. quantity of farm goods that a dollar can buy b. quantity of nonfarm goods that a dollar can buy c. quantity of nonfarm goods that a unit of farm goods can buy d. subsidies farmers receive from the government in the form of price ceilings on farm goods e. ratio of their incomes to the incomes of nonfarm producers
Graphically, periods of federal budget deficits appear as upward-sloping portions of the debt-to-GDP line, while periods of budget surpluses appear as downward-sloping portions of the line
a. True b. False Indicate whether the statement is true or false