If a nation's terms of trade rises from 95 to 106, then we can conclude
a. the gains from international trade are reduced
b. the ratio of export to import prices must have decreased
c. its imports have become relatively cheaper compared to its exports
d. its purchasing power is now lower than before
e. that 106 is impossible because the terms of trade cannot exceed 100
C
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If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then the firm's Lerner Index equals
A) 58/16. B) 16/42. C) 58/42. D) 42/58.
Which of the following is NOT among the statements that critics of prospect theory have made about it?
A. It is not necessary, since expected utility theory accounts rather well for most risky choices. B. The evidence reflects systematic mistakes that consumers might correct through experience and awareness. C. Instead of explaining behavioral puzzles, prospect theory merely summarizes them. D. Loss aversion has been proven to be false in many theoretical and experimental economic works.
The study of how people choose among the alternatives available to them is the:
A) definition of economics. B) model of demand. C) theory of opportunity costs. D) method of distinguishing between microeconomics and macroeconomics.
Evaluate the following? statement: In the short run, if an economy experiences inflation of 10 percent, the cause of the inflation is unimportant. Whatever the cause, the only important issue the government needs to be concerned with is the 10 percent increase in the price level.