In the? circular-flow diagram showing how a market system? works,
A. income flows to firms and the government through factor markets.
B. households are demanders and firms are suppliers in factor markets.
C. firms and households are both suppliers in product markets.
D. income flows to firms through product markets.
E. households purchase output produced by firms in product and factor markets.
Ans: D. income flows to firms through product markets.
Explanation: The product is sold by firms and factor is sold by households so product market will give income to firms and factor market to households.
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It is profitable to hire more labor if the price level ________ and the money wage rate ________
A) rises; falls B) rises; rises by the same percentage C) falls; does not change D) falls; rises E) does not change; rises
When the production of a good has an external cost, the
A) marginal social cost curve lies below the marginal private cost curve. B) marginal social benefit curve lies above the marginal private benefit curve. C) equilibrium quantity in an unregulated, competitive market has a marginal social cost greater than the marginal social benefit. D) equilibrium quantity in an unregulated, competitive market has a marginal social cost less than the marginal social benefit.
If the purchasing power of the dollar is less than the purchasing power of the British pound, purchasing power parity predicts that the exchange rate will
A) decrease if the exchange rate is less than 1 pound per dollar. B) be equal to the relative purchasing power across the currencies in the long run. C) increase if the exchange rate is greater than 1 pound per dollar. D) All of the above are correct.
When the price of a commodity rises, we can expect
a. marginal utility of the last unit purchased will rise. b. marginal utility of the last unit purchased will fall. c. marginal utility of the last unit purchased will be unaffected. d. purchases to rise because of the increased marginal utility.