Which of the following statements is correct? I. When economists derive the aggregate demand curve, they are looking at the effect of the price level on one commodity only. II. Any non-price-level change that increases aggregate spending on domestic goods shifts the AD curve to the right.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
Answer: B) II only
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A fall in the price level would lead to an increase in consumption according to ________ because ________
A) Friedman; the value of assets fall B) Modigliani; the value of assets fall C) Friedman; the value of assets rise D) Modigliani; the value of assets rise
Give a short concise definition for the following terms and explain their relationship to the study of economics
a. marginal physical product b. marginal revenue product c. law of diminishing returnsd economies of scale
Figure 7.1 shows the U-shaped cost curves for a producer. In the table figure, A is the marginal cost curve, B is the average variable cost curve, and C is the average total cost curve. At an output of 10, the:
a. ?fixed cost equals $10. b. ?total cost equals $10. c. ?fixed cost equals $1. d. ?marginal cost equals $10. e. ?variable cost equals $10.
Which of the following could be evidence of a market failure?
A) Resources in an economy are not fully utilized. B) The market price of a product is above the average cost of production. C) There are only a handful of firms competing against each other in an industry. D) Market prices do not reflect true production costs.