When a consumer's willingness to buy a good or service is influenced by the number of people who have purchased that good or service, this is called
A. an advertising gimmick.
B. a network effect.
C. a switching cost.
D. an opportunity cost.
Answer: B
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If the economy were producing at point E and moved to point B the opportunity cost in terms of lost production of outboard motors would be
A. 16 units of outboard motors.
B. 14 units of outboard motors.
C. 12 units of outboard motors.
D. 10 units of outboard motors.
Most private turnpikes failed to earn profits because
a. tolls were easily avoided. b. it was too costly to carry freight by land carriage. c. they faced extensive competition from steamboats, canals and railroads. d. dishonest gatekeepers often pocketed the tolls collected. e. All of the above.
How does value of marginal product (VMP) of labor determine the number of workers a competitive firm will hire?
When aggregate demand declines unexpectedly and wage contracts are fixed, then the average price level will:
a. increase and business firms will hire new workers. b. decline and firms will reduce wages. c. decline and business firms will lay off workers. d. increase and business firms will lay off workers. e. increase and business firms will increase wages.