Which of the following is used to explain why a consumer's willingness to buy Microsoft Office increases as the number of other people who use Microsoft Office increases?
A) network externalities
B) market failure
C) diminishing marginal utility
D) the income effect of a price change
Answer: A
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In Table 3-2, from combination C, the opportunity cost of 2 more units of cotton would be
A. 4 units of corn. B. 8 units of corn. C. 14 units of corn. D. 16 units of corn.
For Outback Steakhouse, seating capacity is limited in the short run. In the long run, they can add as many seats as they want. Therefore, the price elasticity of supply for meals at Outback would be ________ in the short run than in the long run.
A. the same B. more variable C. lower D. higher
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Economists who believe in sound finance would say that in a recession, the government should:
A. run a budget deficit because the Ricardian equivalence theorem is true both in theory and in practice. B. maintain a balanced budget for political and moral reasons. C. run a budget deficit despite the truth of the Ricardian equivalence theorem. D. maintain a balanced budget because the Ricardian equivalence theorem is true in practice.