Suppose the Organization of Petroleum Exporting Countries (OPEC) sharply increased the price of oil, which triggered higher inflation rates in the United States. This type of inflation is best classified as:
A. pseudo-inflation.
B. demand-pull inflation.
C. cost-push inflation.
D. hyperinflation.
Answer: C
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An economic model is
A) a generalization that summarizes all the normative assumptions we make about a particular issue. B) a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand. C) a statement that describes how the world should be. D) a collection of facts that describe the real world.
The political market place requires all EXCEPT
A) diplomats. B) firms. C) voters. D) politicians.
The mathematicians and economists who have been hired by Wall Street firms to build mathematical models to aid the pricing of derivatives are generally referred to as
A) speculators. B) hedgers. C) rocket scientists. D) market makers.
Suppose a monopoly firm has an annual demand function of Qd = 20,000 - 250P, annual variable costs of VC = 16Q + 0.002Q2 and marginal cost of MC = 16 + 0.004Q, where Q is the annual quantity of output. In addition, the firm has an avoidable fixed cost of $25,000 per year. If this firm maximizes its profit, what is the value of the consumer surplus in the market?
A. $121,000 B. $60,500 C. $136,125 D. $0