Which of the following is true about the kink in the demand curve?
A. It occurs because rivals do not respond to price reductions.
B. It is the result of different rival responses to price increases and reductions.
C. It occurs because rivals match price increases.
D. It leads to an explanation of price flexibility.
Answer: B
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The optimal level of consumption is achieved when ________
A) consumption in one period is equal to consumption in the next period B) utility in one period is equal to utility in the next period C) all income and wealth has been spent D) the slope of the indifference curve is equal to the slope of the budget line
Which of the following is an important assumption in the short-run macro model?
a. Government spending depends on income. b. Output does not change. c. Firms do not maintain inventories. d. Investment depends on income. e. Prices do not change.
The providers of information products typically
A. have high marginal costs. B. have high fixed costs. C. have zero fixed costs. D. have low fixed costs.
Tom and Jerry have two tasks to do all day: make dishes and build fences. If Tom spends all day making dishes, he will have make 16 dishes. If he instead devotes his day to building fences, Tom will build 4 fences. If Jerry spends his day making dishes, he will make 14 dishes; if he spends the day building fences, he will build 7 fences. For Tom, the opportunity cost of building a fence is ________ dishes made.
A. 16 B. 8 C. 12 D. 4