Which of the following statements is an example of the wealth effect?
A. If people feel wealthier because their stock portfolios have risen, they tend to increase their consumption of goods and services.
B. One of the many factors that caused the Great Depression was that by 1930 the market for consumer durables was saturated.
C. When wealthy people expect a recession they tend to postpone major purchases until times get better.
D. When people expect inflation they often buy consumer durables before prices go up.
A. If people feel wealthier because their stock portfolios have risen, they tend to increase their consumption of goods and services.
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Refer to Table 3-2. The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market. At a price of $75, the quantity demanded in the market would be
A) 6 oz. B) 46 oz. C) 52 oz. D) 127 oz.
In a two-period model with default, if the market interest rate is low, then
A) default is more likely B) there is no effect on the nation's default decision. C) default is less likely. D) the income effect is larger than the substitution effect.
In long-run equilibrium in perfect competition, every firm is producing at minimum average cost.
Answer the following statement true (T) or false (F)
A firm's economic profits are given by:
a. total revenue minus total accounting cost. b. the owner's opportunity cost. c. total revenue minus total economic cost. d. total revenue minus the cost of capital.