In a booming economy, fiscal policy automatically becomes:
A. expansionary as tax rates fall and welfare payments rise.
B. contractionary as tax rates rise and welfare payments fall.
C. contractionary as tax rates fall and welfare payments rise.
D. expansionary as tax rates rise and welfare payments fall.
Answer: B
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A budget line is defined as
A. the number of units of a good that can be purchased over a range of prices. B. the combinations of a set of two goods that can be purchased, given current income and current prices for the goods. C. how a household’s budget is allocated to various members of the family. D. the maximum amount of money that can be spent. E. the combinations of a set of two goods that the household prefers over other combinations.
A toy manufacturer is experiencing quality problems on its assembly line. Every defective toy that leaves the factory costs the firm $20. The firm has decided to hire quality inspectors to catch defective toys before they leave the factory.
Given the above information, if the cost of each defective toy rises to $50, while inspectors are paid $150 a day, how many inspectors should the firm hire?
A. 3 B. 4 C. 5 D. 6
The neighborhood ice cream shop finds that when it charges $3 per ice cream cone, its total revenues are $90,000. It has total variable costs of $30,000 and total fixed costs of $40,000. From this we can infer the:
A. shop sells 10,000 ice cream cones. B. price is less than average total cost. C. economic profits are $20,000. D. shop will be closed in the long run.
The ability to lower the average costs of production as the quantity produced increases is called
a. Economies of scale b. Economies of scope c. Diseconomies of scale d. Diseconomies of scope