If the economy is to have automatic stabilizers, when real GDP rises:
A. tax revenues should rise.
B. government spending should not change.
C. government spending should rise.
D. tax revenues should fall.
Answer: A
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The above figure shows a perfectly competitive firm. If the market price is $5, the firm
A) is making an economic profit. B) is making zero economic profit. C) will immediately shut down. D) will not shut down. E) might shut down but more information is needed about the AVC.
A local pizzeria raised its price from $9 to $11 for each pizza and the sales of its pizza decreased from 150 to 100 per day. What is the price elasticity of demand in this case?
A) 1/2 B) -2 C) -1/2 D) 2
Test pilots are paid high wages by airplane makers primarily because
a. the demand for labor in this area is very high relative to the demand for labor in other areas of employment. b. the demand for labor in this area is very low relative to the demand for labor in other areas of employment. c. the demand for labor in this category is highly elastic. d. few people possess the required skills and the occupation is very risky.
Firms are likely to underinvest in research and development, which slows knowledge capital, slowing economic growth, because
A. knowledge capital is both rival and excludable, and no other firms can freely access the research and development of one particular firm B. they can save that money and invest in capital accumulation, which is much better for growth C. research and development are expensive and at the firm level, it is subject to increasing returns D. knowledge capital is both nonrival and nonexcludable; other firms can freely access the research and development of one particular firm