Which of the following observations concerning phases of a business cycle is incorrect?
a. The maximum amount of unemployment occurs exactly at the trough.
b. The expansion phase is measured from the trough to the peak
c. The trough is the point in time when output stops declining.
d. The contraction phase is also called recession.
a
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Dan has a car valued at $10,000 that gives him a utility of 50 units. There is a 10 percent chance that he will have an accident that will make his car worthless, in which case his utility will be zero
His utility from a wealth of $7,000 is 45 units. The maximum amount Dan will be willing to pay for car insurance is A) $1,000. B) $3,000. C) $7,000. D) zero.
Owners of a parking lot are deciding whether or not to add more parking spaces to the lot. The owners should stop adding parking spaces where:
a. LRMR=LRMC
b. LRMR>LRMC
c. LRMR
The largest component of aggregate demand is
A. investment spending. B. consumer spending. C. government spending. D. total imports.
Economic conditions favor firms getting larger (producing larger quantity) when the firms are producing under conditions of:
a. Decreasing returns to scale b. Increasing returns to scale c. Constant returns to scale