Which broad field of economics would most likely study how consumers respond to a hike in cigarette taxes?
A. Marginal economics
B. Monetary economics
C. Microeconomics
D. Macroeconomics
Answer: C
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Sunk costs are:
A. costs that have been incurred and cannot be recovered. B. explicit costs that will incur large implicit costs to recoup or recover. C. costs that are upfront on a project and can be pulled out if the business goes under. D. the cost of recovering lost expenditures.
Economists emphasize the importance of equilibrium in markets because
a. trading in markets can only occur at the equilibrium price and quantity b. the behavior of buyers and sellers will automatically guide the market toward the equilibrium price and quantity c. all buyers and sellers are better off at the equilibrium point than any other price and quantity combination d. it represents a compromise between sellers hoping for low prices and buyers searching for high prices e. it is the only price-quantity combination that guarantees that the poorest members of society can purchase the good or service
Game theory is used in a number of areas in economics. What is the primary reason that it is used in analyzing oligopoly type market structures?
a. The firms are producing a similar product b. The firms are producing differentiated products c. The demand curve facing the oligopolistic firms is perfectly inelastic d. The mutual interdependence of firms in industries with a small number of firms e. The demand curve the oligopolistic firm faces is downward sloping
If the demand for a good decreased, what would be the effect on the equilibrium price and quantity?
a. Price would increase, and quantity would decrease. b. Price would decrease, and quantity would decrease. c. Price would increase, and quantity would increase. d. Price would decrease, and quantity would increase.