The consumption function shows the relationship between consumer expenditures and:
a. the interest rate.
b. the tax rate.
c. savings.
d. disposable income.
d
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Suppose that you open your own business and earn an accounting profit of $35,000 per year. When you started your business, you left a job that paid you a $30,000 salary annually
Also, suppose that you invested $70,000 of your own funds to start up your business. If the normal rate of return on capital is 10 percent, your economic profit is A) $5,000. B) -$5,000. C) $2,000. D) -$2,000.
Coal and iron ore are complements in the manufacture of steel. An increase in the price of coal would lead to
A) an increase in the demand for iron ore as producers substitute more iron ore for coal in the production process. B) a decrease in the demand for iron ore as steel manufacturers reduce production of steel. C) an increase in the supply of iron ore as iron ore producers see an opportunity to expand their markets. D) no change in the demand for iron ore since the steel makers must use both iron ore and coal if they are to make steel.
When people smoke cigarettes, their friends and family members may become sick. This affects GDP by
a. reducing GDP by the amount of medical care needed. b. reducing GDP by the cost of the cigarettes purchased. c. increasing GDP by the cost of the medical care and the cost of the cigarettes purchased. d. decreasing GDP by the cost of the medical care and increasing GDP by the cost of the cigarettes purchased.
Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?
a. $3
b. Between $3 and $5
c. Between $5 and $7
d. $7