Refer to the information provided in Figure 2.4 below to answer the question(s) that follow. Figure 2.4Refer to Figure 2.4. The economy moves from Point A to Point D. This could be explained by

A. an increase in economic growth.
B. a change in society's preferences for motorcycles versus hybrid cars.
C. a reduction in unemployment.
D. an improvement in technology.

Answer: B

Economics

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Because the productivity of labor decreases as the quantity of labor employed increases

A) the quantity of labor a firm demands increases as the real wage rate decreases. B) the quantity of labor a firm demands increases as the money wage rate decreases. C) the labor demand curve shifts right as the real wage rate decreases. D) the aggregate production function shifts upward as the real wage rate decreases.

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Explain how the production possibilities frontier illustrates scarcity

What will be an ideal response?

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Exhibit 30-1

?

A. Curve X, because if there is a negative externality, external costs are associated with it: social costs = external costs + private costs, therefore the marginal social cost curve must lie above the marginal private cost curve. B. Curve Y, because if there is a negative externality, negative external costs are associated with it: social costs = negative external costs + private costs, therefore the marginal social cost curve must lie below the marginal private cost curve. C. Curve X, because if there is a negative externality, external benefits are associated with it: social costs = external benefits + private costs, therefore the marginal social cost curve must lie above the marginal private cost curve. D. Curve Y, because if there is a negative externality, negative external benefits are associated with it: social costs = negative external benefits + private costs, therefore the marginal social cost curve must lie below the marginal private cost curve.

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Which of the following is the best description of the risks of corporate bonds?

a. the firm declines to pay dividends b. both bankruptcy and higher market interest rates c. only bankruptcy d. lower market interest rates e. both the firm declines to pay dividends and higher market interest rates

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