Simon owns a gas station, and a new tax has been passed on gasoline. How can he expect his customers to react to the tax over the short term?
a. They will quit buying gas and use an alternative fuel.
b. They will buy more gas because it has an inelastic supply curve.
c. They will buy slightly less gas because there is no substitute.
d. They will buy considerably less gas because it has an inelastic demand curve.
c. They will buy slightly less gas because there is no substitute.
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In the short run, as output rises above potential ________
A) inflation will fall from its current level which explains the upward-sloping nature of the Phillips curve B) inflation will rise from its current level which explains the upward-sloping nature of the aggregate supply curve C) unemployment will rise above the natural rate which explains the upward-sloping nature of both the Phillips curve and the AS curve D) all of the above E) none of the above
Assume that a firm spends $500 on two inputs, labor (graphed on the horizontal axis) and capital (graphed on the vertical axis)
If the wage rate is $20 per hour and the rental cost of capital is $25 per hour, the slope of the isocost curve will be A) 500. B) 25/500. C) -4/5. D) 25/20 or 1.25.
Economic models suggest that movie stars have salaries that
a. greatly exceed their marginal contribution to the movie studio's revenue. b. understate their full contribution to the movie studio's revenue-as the celebrities are the main reason that people go to see movies. c. are about equal to their marginal revenue products. d. can only be explained by looking at specific movie stars and their individual salaries.
Aggregate demand is a ____ rather than a ____.
A. fixed number; concept B. schedule; fixed number C. set number; concept D. government aggregate; private aggregate