Suppose that the owner of a local ice cream store, knowing that demand for ice cream is higher when the weather is warmer, always charges a price in cents for a scoop of ice cream that is equal to two times the current outdoor temperature, measured in Fahrenheit (so that if it is 90 degrees outside, the ice cream is $1.80 per scoop). This type of behavior is ________.
A. exactly the type of behavior that Keynes believed most firms exhibit.
B. free from menu costs.
C. inconsistent with the key assumption upon which the basic Keynesian model is built.
D. known as meeting demand.
Answer: C
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The Cambridge and Fischer versions of the quantity theory are identical if
a. V = k.. b. V=k2. c. V= 1/k. d. none of the above.
The marginal factor cost for a monopsonist is:
a. equal to the market wage rate. b. above the market wage rate. c. below the market wage rate. d. affected by the fact that workers are less willing to work than under conditions of perfect competition. e. lower than the marginal revenue product of labor in equilibrium.
If Emma has a positive rate of time preference, she will
a. value the receipt of $10,000 twenty years from now just as much as she would value receipt of the $10,000 now. b. value the receipt of $10,000 twenty years from now more than she would value receipt of the $10,000 now. c. value the receipt of $10,000 twenty years from now less than she would value receipt of the $10,000 now. d. prefer to receive any amount of money now to the $10,000 twenty years from now.
When total production is greater than total expenditures, __________ is produced than households want to buy, which leads to __________ in inventory, which signals firms that they have __________, which causes firms to cut back production
A) less; decreases; underproduced B) less; increases; overproduced C) more; decreases; underproduced D) more; increases; overproduced