When Country X has high economic growth, this country has
A) a high level of real Gross Domestic Product (GDP).
B) a high level of per capita real Gross Domestic Product (GDP).
C) a large increase in per capita real Gross Domestic Product (GDP).
D) a large increase in personal income.
C
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With regard to its profits and losses, how is the short run different from the long run for a perfectly competitive firm?
What will be an ideal response?
A country has had its per capital real GDP remain constant for several years. During this period this country
A) has not experienced any economic growth. B) may have experienced economic growth if the average hours worked per week have fallen. C) will have experienced an inward shift of the production possibilities curve. D) will have an increase in the number of poor people.
Four firms control the market for a particular good, resulting in an HHI of 6,550. Total industry sales are $1,750, and it is known that one firm has sales of $1,400 and another sales of $175. If each of the remaining two firms has the same sales, then we can conclude that the remaining two firms each have a market share of:
A. $90. B. $200. C. 0.20. D. 6,550.
Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do you agree with her comment?
A) Yes, I agree with her. One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations. B) I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits. C) Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more reliable predictions. D) I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine the moral implications of these decisions.