Which of the following refers to the increase in the usefulness of a product as the number of consumers who use it increases?
A) positive externalities
B) network externalities
C) external marginal utility
D) the impact of celebrity endorsements
Answer: B
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Drivers are charged a price to use a tollway. But even tollways, such as the Tri-State Tollway near Chicago, become heavily congested during the morning and evening rush hours. Thus,
A) the rush hour represents a surplus of cars. B) your textbook author is wrong in claiming congestion is caused by zero prices. C) higher tolls are required during rush hours to reduce congestion. D) growing population is indeed the problem.
If the inflation rate target is 2%, the current inflation rate is 3%, and the output gap is 2%, then according to the Taylor rule, the nominal federal funds rate should be ________ percent
A) 4.5 B) 7 C) 6.5 D) 5.5 E) none of the above
If a good's demand function is Q = 30 - 3P, then calculate the price elasticity of demand when
a. good price is $3 using the point elasticity formula b. good price is $4 using the point elasticity formula c. good price decreases from $4 to $3, using the arc elasticity formula d. good price is $5, using the point elasticity formula e. good price increases from $4 to $5, using the arc elasticity formula
Economic theories are
a. useful because they are as exact as theories in the physical sciences b. useless because they are based on abstractions c. useful because they allow us to make predictions d. too complex to understand because they include all of reality e. useful in predicting events only if their assumptions are realistic