In Figure 35.1, what is the opportunity cost of DVD players in Japan?
A. 1 motorcycle per DVD player.
B. 2 motorcycles per DVD player.
C. 1/3 of a motorcycle per DVD player.
D. 1/2 of a motorcycle per DVD player.
Answer: B
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Gasoline and bicycles are substitutes in consumption. Suppose we increase the federal gasoline tax to $1 per gallon
Initially, the gasoline price rises due to the tax, and the demand curve for bicycles shifts rightward because these goods are substitutes. Then, the bicycle price rises, and the demand curve for gasoline shifts rightward. Assuming the general equilibrium is achieved in both markets after these two steps, which of the following statements is NOT true? A) Partial equilibrium analysis only focuses in the first-round changes in the gasoline market (ignoring the secondary effects that arise from changes in the bicycle market). B) Partial equilibrium analysis would predict a larger shift in the price and quantity demanded for gasoline than a general equilibrium analysis. C) The price increase in gasoline is larger under the general equilibrium approach, but the change in the quantity of gasoline demanded is smaller than under partial equilibrium analysis. D) All of these statements are true.
Which actor in the simplified circular flow model is on the supply side of the goods market?
A. Firms B. Households C. Markets for factors of production D. Government
Entrepreneurship
A. Can result in economic losses. B. Always involves greater rewards than risks. C. Occurs in small businesses, but not large corporations. D. Cannot earn an economic profit.
Suppose the wage rate in a certain industry rises, yet firms hire more workers. The best explanation of this is that labor:
A. demand fell. B. demand increased. C. supply fell. D. supply increased.