The cross elasticity of demand
A) means that an increase in the demand for one good leads to a decrease in demand for another good.
B) measures how a change in the price of one good impacts the demand for another good.
C) measures how a change in supply impacts the demand for the good.
D) means that an increase in the price of one good leads to an increase in the price of another good.
E) measures how a change in income impacts the demand for the good.
B
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The field of macroeconomics developed when economists looked for causes of:
A. the wealth of nations. B. the Great Depression C. poverty and inflation. D. World War I.
The opportunity cost of current consumption is:
A) nominal wage rate. B) the inflation rate. C) real wage rate. D) the real interest rate.
The need for government subsidies of irrigation produced
(a) the Desert Land Act (1877). (b) the Interstate Commerce Commission Act (1887). (c) the Newlands Act (1902). (d) all of the above.
Since it is costly for stockholders to monitor corporate managers, managers may be able to achieve personal perks and pursue other policies that conflict with profit maximization. This is an example of
a. an external benefit. b. economies of scale. c. the principal-agent problem. d. sunk costs.