Macroeconomics is best defined by which of the following statements?
A) Macroeconomics is the study of how firms attempt to maximize profits.
B) Macroeconomics is the study of the behavior of the economy as a whole.
C) Macroeconomics is the study of individual households.
D) Macroeconomics is the study of how the prices of individual goods are determined.
B
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Suppose a single firm has constant marginal cost and faced the demand curve 
a. Illustrate in this graph how a monopolist who cannot price discriminate would price this good. What is the monopoly price and quantity?
b. Suppose two firms with the same marginal cost as the monopolist operated in this market instead. Suppose quantity is the strategic variable and the two firms simultaneously choose quantity. On a graph with firm 1's output on the horizontal and firm 2's output on the vertical, illustrate firm 2's best response function with numerical labels for each intercept. c. Add firm 1's best response function and determine the Nash equilibrium quantities. d. What's the equilibrium price resulting from the quantities you determined in (c)? e. What would be the equilibrium price if the strategic variable for the firms were price instead? What will be an ideal response?
Business people often speak about price elasticity without actually using the term. Which statement describes a good with an elastic demand?
A) "A price cut won't help me. It won't increase my sales, and I'll just get less money for each unit." B) "I don't think a price cut will help my bottom line any. Sure, I'll sell a bit more, but I'll more than lose because the price will be lower." C) "My customers are real shoppers. After I cut my prices just a few cents below those my competitors charge, customers have been flocking to my store and sales are booming." D) "The economic expansion has done wonders for my sales. With more people back at work, my sales are taking off!"
The theory of consumer choice illustrates the
a. importance of property rights in creating efficient markets. b. ability of a single economic actor to have a substantial influence on market prices. c. the trade-offs that people face in their role as purchasers. d. All of the above are correct.
If wealth rises,
A. The AD curve will shift to the left. B. There will be a movement to the left along the AD curve. C. There will be a movement to the right along the AD curve. D. The AD curve will shift to the right.