The idea that consumers determine what is produced in the economy through their demands is known as
A. consumer sovereignty.
B. free enterprise.
C. a laissez-faire economy.
D. a command economy.
Answer: A
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Which of the following impacts of a Gulf hurricane would not show up as a direct loss to GDP?
a. The reduction in crude oil production b. The reduction in oil refining c. The loss of oil production facilities d. The loss of restaurant business in coastal communities e. The reduction in agricultural production
Suppose that two drug manufacturers represent the only two producers in the industry and further suppose that the companies can spend a lot of money on research to develop new drug treatment. If only one develops a product, they make very high profits, but if they produce similar drugs, their profits are lower given the high research costs and they split the market for their products. But if they both sell their current products and spend little on research, they can still make good profits. The best outcome that they could achieve would be for the two firms to
A. ignore each other’s behavior. B. always conduct research activities. C. form a cartel. D. reach a Nash equilibrium.
An increase in national saving reduces the interest rate and so reduces net capital outflow
a. True b. False Indicate whether the statement is true or false
If the MPC in an economy is .75, a $1 billion increase in taxes will ultimately reduce consumption by:
A. $1 billion. B. $0.75 billion. C. $3 billion. D. $4 billion.