Related to the Economics in Practice on page 176: When there are a few unsold seats in an arena for a rock concert, the marginal cost of filling those seats
A. is probably close to zero.
B. is generally quite high.
C. will primarily depend on the number of people waiting to get the seats.
D. will be negative.
Answer: A
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Investment is the expenditure done by
A) savers. B) firms. C) the rest of the world. D) governments. E) Both answers A and B are correct.
If investment in an economy falls, which of the following is likely to happen?
A) Labor demand will increase. B) The revenue of firms in the economy will fall. C) Asset prices will rise. D) The number of mortgage defaults will fall.
The Fed buys $25,000 of government securities. The desired reserve ratio is 20 percent and the currency drain ratio is zero. What will be the change in the quantity of money?
A) $5,000 B) $20,000 C) $25,000 D) $125,000 E) $50,000
Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?
A) Quantity demanded will decrease, quantity supplied will increase, and a surplus will result. B) Quantity demanded will increase, quantity supplied will decrease, and a shortage will result. C) Quantity demanded will increase, quantity supplied will decrease, and a surplus will result. D) Quantity demanded will decrease, quantity supplied will increase, and a shortage will result.