Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 6 consumption goods and 3 capital goods, while economy B also chooses an efficient point, but with 4 consumption goods and 5 capital goods. In the future we can predict:
A. economy A will operate inefficiently.
B. economy B will operate inefficiently.
C. economy A and economy B will grow equally fast.
D. economy B will grow faster than economy A.
Answer: D
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A ________ describes the possible moves in a game in sequence and lists the payoffs to each possible combination of moves.
A. decision tree B. payoff matrix C. multi-period game D. game graph
The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the short run, what is TRUE if the production of ethanol increases?
A) The demand for corn will increase. B) The supply of ethanol will decrease. C) The supply of corn will increase. D) The demand for ethanol will increase.
Assume that a firm's marginal revenue curve intersects the rising portion of the marginal cost curve at 100 units of output. At this output level, a profit-maximizing firm's total cost is $1,000 . If the price of the product is $3 per unit and the firm produces at the profit-maximizing level, the firm will earn an economic profit equal to:
a. -$1,000. b. -$700. c. -$400. d. -$600. e. $200.