When economists discuss the “efficiency” of a market economy, they are referring to ______.
a. the size of the economic pie
b. how income is distributed
c. its annual productivity rate
d. the effectiveness of incentives
a. the size of the economic pie
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One of the two criteria for a resource to be considered capital is that it must:
A) occur naturally. B) be part of a factory or building. C) be a skill or talent possessed by a person. D) be possible to use it to produce other goods and services.
In the classical model, real Gross Domestic Product (GDP) per year is
A. due to supply conditions plus the extent of government intervention in the economy. B. demand determined. C. supply determined. D. determined by supply and demand conditions together.
In the traditional Keynesian model, a tax decrease
A. causes a leftward movement along the C + I + G + X line. B. causes the C + I + G + X line to shift upward. C. causes the C + I + G + X line to shift downward. D. causes a rightward movement along the C + I + G + X line.
Which of the following is not true for a firm in perfect competition?
A) Profit equals total revenue minus total cost. B) Price equals average revenue. C) Average revenue is greater than marginal revenue. D) Marginal revenue equals the change in total revenue from selling one more unit.