Some economists suggest that because of the costs of negotiating contracts, printing price lists, etc., it is costly for firms to change prices in response to demand changes. This hypothesis is known as the
A. rational expectations theory.
B. sticky wage theory.
C. menu cost theory.
D. Phillips theory.
Answer: C
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The U.S. government attempts to spur research and development activities through
a. monetary policy. b. interest rate policy. c. export subsidy policy. d. tax policy.
It's not likely that a country will specialize completely in one good even if it has a lower opportunity cost because
A. Comparative advantage is not a workable concept in the world economy. B. Opportunity costs increase as more of a good is produced. C. The country would end up inside its production possibilities curve. D. The country would want to save some of the good for its own citizens.
Assume that each day ten thousand children watch Sesame Street on public television and that watching Sesame Street generates a benefit of $100 per child per year. Once a year, public television hold a pledge drive asking viewers to make voluntary contributions in order to keep the programming available to everyone. If public television stations collect less than $100 per child during the pledge drive, then this is evidence:
A. that parents do not care about their children. B. that head taxes are regressive. C. that the government should not subsidize public television. D. of the free-rider problem.
The marginal factor cost curve for a monopsony:
A. is the labor supply curve. B. lies below the labor supply curve. C. lies above the labor supply curve. D. is unrelated to the labor supply curve.