Fixed costs exist only in the:
A. long run when some inputs are fixed.
B. long run when all inputs are fixed.
C. short run when all inputs are fixed.
D. short run when some inputs are fixed.
Answer: D
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Juan and Sophia have decided to stop studying economics and get a bite to eat. Juan wants to go for a pizza and Sophia wants a hamburger. They decide to go for pizza. What can we conclude from this?
A) Juan always gets more utility from pizza than Sophia does. B) Sophia gets less utility from pizza than she could from a hamburger. C) Sophia will get negative utility from the pizza. D) Utility analysis does not work here since Sophia did not eat a hamburger.
Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?
Which of the following best summarizes the importance of business failure and the central idea of "creative destruction in a market economy"?
A) When a business fails, the assets and resources from that business become unemployed, resulting in higher government subsidies. B) Only through frequent business failure will it be possible to avoid income being concentrated into the hands of a few rich entrepreneurs. C) The new, rival businesses that drive out old competitors tend to be less efficient and less creative than the older established businesses. D) Business failure allows the assets and resources from that business to move into other areas where they will be more productive.
According to the theory of liquidity preference, holding the supply of real money balances constant, an increase in income will ______ the demand for real money balances and will ______ the interest rate.
Fill in the blank(s) with the appropriate word(s).