Suppose there are two good types (Type 1 and Type 2) and suppose the weights for the types are 60% for Type 1 and 40% for Type 2. Suppose the Price Index for Type 1 is 200 and the Price Index for Type 2 is 150. The overall price index is
A. 180.
B. 175.
C. 350.
D. 140.
Answer: A
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In the long run, if 1,000 units are produced at a cost of $8,000 and 1,200 units at a cost of $9,200, then over this range of output there are
A) constant economies of scale. B) constant returns to scale. C) diseconomies of scale. D) economies of scale. E) constant diseconomies of scale.
The economy’s self-correcting mechanism ensures that neither recessionary nor inflationary gaps will be eliminated eventually.
Answer the following statement true (T) or false (F)
Which of the following federal agencies is NOT engaged in economic regulation?
A. Federal Aviation Administration B. Food and Drug Administration C. the Federal Reserve D. Federal Deposit Insurance Corporation
Assume that you set up a sole proprietorship and your lawyer tells you that as the owner, you could stand to lose your personal wealth if the business goes bankrupt. This means that a sole proprietorship
A) faces limited liability. B) faces unlimited liability. C) has little chance of succeeding. D) is not a good type of business to set up.