Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles,
A. initially increases, then decreases.
B. increases.
C. remains constant.
D. decreases.
Answer: B
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Many countries find it difficult to achieve economic growth. This is because economic growth
A) depends on technological change and technological change depends on noneconomic factors such as the growth rate of scientific knowledge. B) is not understood well by economists, so it is difficult to advise policy makers on the best policies to pursue. C) requires saving, and saving means less consumption today. A poor country may find it difficult to consume less today. D) appears to be predetermined and not subject to factors that policy makers can have any affect on.
According to the short-run Phillips curve, if unemployment is 2.4% and inflation is 3.7%, a decrease in the inflation rate might result in which of the following?
A) an increase in the unemployment rate to 3.4% B) a decrease in the unemployment rate to 3.0% C) a decrease in the demand for labor in the economy D) Both A and C are correct answers.
The ratio of the price of the good on the horizontal axis divided by the price of the good on the vertical axis multiplied by -1
a. is the slope of the demand curve b. measures the price elasticity of demand for a particular good c. defines real income for the consumer d. is the slope of the budget line e. is the slope of the indifference curve
Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per-unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should
A) use relatively more capital. B) use relatively less capital. C) increase all inputs proportionately. D) decrease all inputs proportionately.