If the quantity demanded for a good rises as the price falls, the curve representing this relationship will be:
A. horizontal.
B. upward-sloping.
C. downward-sloping.
D. impossible to determine.
Answer: C
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There are two people in an economy. Person A’s demand for a public good is Q = 10 - P and person B’s demand is Q = 20 - 2P. The highest total that A and B will be willing to pay for six units of the public good is
a. $3 b. $4 c. $7 d. $11
In 1 hour, Robinson Crusoe can either shoot 4 birds or catch 4 fish. A typical native on a nearby island can either shoot 5 birds or catch 10 fish in an hour's time. Which of the following is true according to the doctrine of comparative advantage?
a. Crusoe will be better off if he specializes in either activity and then trades with the natives. b. The natives have a comparative advantage in both shooting birds and catching fish, so Crusoe cannot make himself better off by trading with the natives. c. Crusoe should concentrate on shooting birds and then trade with the natives to obtain fish. d. Crusoe should spend his time catching fish, and he should trade with the natives to obtain birds.
The figure above represents the relationship between output and cost in an industry with an external cost. Which line represents the marginal private cost (MC) curve?
A) Curve 1 B) Curve 2 C) the dotted line BC D) the y-axis E) the dotted line AB
At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's net investment for the year totaled
A) 1 machine. B) 2 machines. C) 3 machines. D) 6 machines.