A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results:Qd = 25,000 ? 5,000P + 25MQs = 240,000 + 5,000P ? 2,000PIwhere P is price, M is income, and PI is the price of a key input. The forecasts for the next year are 
= $15,000 and 
I = $20. Average variable cost is estimated to beAVC = 14 ? 0.008Q + 0.000002Q2Total fixed cost will be $6,000 next year. Suppose that income for next year is forecasted to be $9,000 instead. What is the profit-maximizing output choice for the firm?
A. 2,000 units
B. 1,000 units
C. 2,860 units
D. 1,860 units
E. none of the above
Answer: E
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Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic. She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor
If I wanted to buy a mystery novel I would have many authors to choose from. Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct? A) She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit cards. Most people pay for novels and other books with debit cards. B) She is correct. C) She is confused. She should have concluded that the textbook has a more elastic demand than a novel. D) The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel.
Which of the following is NOT true about this national income equation:
A) For the current account, CA, to improve, we may have to invest less than otherwise would be the case. B) For the current account, CA, to improve, we may have to save more to maintain the same amount of investment that includes foreign saving. C) For the current account, CA, to improve, the government may have to run budget surplus. D) A reduction in the trade deficit with one country will simply show up as an increase in a trade deficit with another country. E) None of the above.
Which of the following numbers, if it were equal to the 80/20 ratio for a particular country, would indicate the most inequality?
A. 1 B. 2 C. 0 D. 0.5
If the long-run aggregate supply curve is vertical, factors that shift the aggregate demand curve to the left will increase the price level.
Answer the following statement true (T) or false (F)