Which of the following pairs is the most likely to exhibit a direct relationship?
A. The price of gasoline and the amount of gasoline that people purchase.
B. Cholesterol levels and the likelihood of developing heart disease.
C. Outdoor temperature and heating oil sales.
D. Annual income and weekly pawn shop visits.
Answer: B
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For a monopsony buyer, the marginal expenditure per unit of an input
A) exceeds the average expenditure per unit. B) is less than the average expenditure per unit. C) equals the average expenditure per unit. D) any of the above could be true.
The McDonald's restaurants in Russia grow their own potatoes to guarantee that they are grown correctly. Growing potatoes is very different from running a fast-food restaurant. One could say of McDonald's decision to grow its own potatoes for the Russian franchise that
a. the bounded rationality criterion outweighs the need for quality control b. the bounded rationality criterion is outweighed by the need for quality control c. both bounded rationality and the need for quality control are factors that make it rational for McDonald's to grow its own potatoes d. growing potatoes is irrational e. there must not be many potato suppliers in Russia
The equation of exchange states that
a. money supply multiplied by real output equals velocity. b. velocity multiplied by money supply equals real output times the price level. c. money supply divided by velocity equals nominal GDP. d. money supply divided by velocity equals real GDP.
If the United States were to stop importing flowers from other nations, and instead insisted that it grow all of its own flowers, the effect of this would be to
A. improve consumer well-being. B. draw resources necessary to grow flowers away from the rest of the economy. C. reduce flower prices because they would not have to be transported as far. D. improve the wellbeing of foreign flower producers.