If peanut butter and jelly are complements, then their cross elasticity of demand must be
A) infinitely high.
B) a positive number that might be greater than 1.
C) a number between zero and one.
D) a negative number.
D
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A firm should shut down in the short run if the price is less than the:
A) average fixed cost. B) average total cost. C) average variable cost. D) marginal cost.
The economy's self-correcting mechanism
a. tends to push unemployment toward a specific point called the natural rate of unemployment. b. works better at correcting inflationary gaps than recessionary gaps. c. cannot work if the Phillips curve is vertical. d. ensures that the economy will not have to endure a long period of high unemployment.
Suppose the federal funds rate rises by 0.5 percent. If the Taylor rule is correct, this might be because output is:
A. 0.5 percentage points below potential output. B. 0.5 percentage points above potential output. C. 1 percentage point below potential output. D. 1 percentage point above potential output.
Grace has just eaten a slice of pizza and says it gave her a utility of 8. If she chooses to eat a second slice:
A. she is not acting rationally. B. she will experience an increase in total utility. C. she will experience a drop in total utility. D. None of these is true.