Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A. increases
B. remains constant.
C. initially increases, then decreases.
D. decreases.
Answer: A
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The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP) of labor used to produce apples would
A. double. B. change in a manner that cannot be determined without additional information. C. be cut in half. D. not change.
The above figure shows the market for pizza. The market is in equilibrium when some of the pizza firms go out of business. What point represents the most likely new price and quantity?
A) A B) B C) C D) D E) E
As real GDP ________, aggregate planned expenditure ________
A) decreases; remains the same, because it is independent from real GDP B) increases; remains the same, because the increase in some components is precisely offset by the decrease in others C) increases; decreases D) decreases; increases E) increases; increases
If a product has zero external costs, then
A) marginal social cost equals marginal private cost. B) marginal social cost is greater than marginal private cost. C) marginal social cost is less than marginal private cost. D) marginal social cost equals zero. E) We need more information to determine the relationship between marginal private cost and marginal social cost.