If the cross-elasticity of demand for two goods is positive, this means that the goods are:
A. normal goods.
B. inferior goods.
C. substitutes.
D. complements.
Answer: C
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Broomfield city council is deciding how many police officers the city needs. Broomfield's population is 10,000 people. The marginal cost of a police officer is $60,000 per year
The marginal benefit schedule of an average city resident from police protection is shown in the table above. Police protection is a public good. The marginal benefit for all of Broomfield from hiring the 4th police officer is A) $56,000. B) $5.60. C) $8,000. D) $6.00.
Cooperation in an infinite game
A. is impossible. B. is possible if grim strategies are used. C. is guaranteed. D. is possible if no one cares about the future.
For a macroeconomist, the case for aggregation is based on two principles—(1) the composition of demand and supply may not matter for some purposes and (2)
A. during fluctuations markets normally move together. B. individual markets allocate resources efficiently. C. inflation, unemployment, and growth never go together. D. individual markets distribute income efficiently.
Figure 8.2 shows demand and costs for a monopolistically competitive firm. At the profit-maximizing output level, the firm's profit is:
A. $1,200. B. $1,050. C. $750. D. $375.