Monopolistically competitive firms use product differentiation to increase the price elasticity of demand
a. True
b. False
B
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When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from ________, and the government policy to eliminate this gap will ________ real GDP and ________ the price level
A) a recessionary gap; decrease; decrease B) an inflationary gap; increase; decrease C) a recessionary gap; increase; increase D) an inflationary gap; decrease; increase E) a recessionary gap; decrease; increase
The law of comparative advantage says that a person should produce a good if she
a. has the greatest desire to consume that good b. has the lowest opportunity cost of producing that good c. has an absolute advantage in a related activity d. has a comparative advantage in a related activity e. is equally good at producing this good as someone else is
Which of the following terms describes how a good is produced in stages?
a. supply chain b. value chain c. supply trade d. value trade
If the wage rate falls, consumption
A. rises because the income and substitution effects are working in opposite directions to change consumption. B. rises because the income and substitution effects are both working in the same direction to increase consumption. C. falls because the income and substitution effects are both working in the same direction to decrease consumption. D. falls because the income and substitution effects are working in opposite directions to change consumption.