Demand and marginal revenue curves are downward-sloping for monopolistically competitive firms because
A. product differentiation allows each firm some degree of monopoly power.
B. there are a few large firms in the industry and they each act as a monopolist.
C. mutual interdependence among all firms in the industry leads to collusion.
D. each firm must take the market price as given.
Answer: A
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Although GDP is not the same as economic well-being, high levels of GDP are positively correlated with all of the following except:
A. higher rates of literacy. B. higher rates of infant mortality. C. longer life expectancies. D. higher material standards of living.
Suppose you were to hear an economist defend the minimum wage on the grounds that she estimated the productivity of workers both before and after an increase in the minimum wage and found that the increase in the minimum wage increases productivity by more (on a percentage basis) than it increased costs. You would know her to be relying on the ________ argument.
A. macroeconomic B. work effort C. consumer and producer surplus D. elasticity
John and Sally have identical preferences except that Sally's utility is exactly 10 times John's for each basket of goods. If they have the same income and face the same prices
A) Sally will consume 10 times the amount that John consumes. B) Sally will receive 1/10 the satisfaction of John. C) both will consume the same amount of all goods. D) John and Sally will have equal total utility.
Suppose the U.S. can produce 10 units of food and 5 units of clothing (or any linear combination) and Canada can produce 6 units of food and 3 units of clothing (or any linear combination)
What type of trade will occur between these two countries? Explain.