As the price of computers falls, the quantity of computers demanded increases. This is an application of:
A. needs versus wants.
B. the law of supply.
C. the law of demand.
D. the production possibilities curve.
Answer: C
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"Liquidity" refers to the ability to change money into assets
Indicate whether the statement is true or false
Which of the following events would increase the four-firm concentration ratio in a milk industry with six firms?
a. The two largest milk producers merge. b. The largest milk producer buys an ice cream-making plant. c. The largest milk producer lures customers away from the second-largest producer. d. The four largest milk producers collusively fix prices.
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
If psychological limitations and other complications cause people to be unable to examine and think through every possible choice available to them and rely instead on rules of thumb, then these individuals exhibit
A) unbounded rationality. B) normative thinking. C) bounded rationality. D) positive thinking.