How does human specialization contribute to an economy's output?
A. It makes use of differences in abilities.
B. It decreases derived demand.
C. It works like an "invisible hand."
D. It is a process of creative destruction.
Answer: A
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Other things equal, a fall in the market price caused by a change in supply will
a. decrease consumer surplus. b. increase producer surplus while leaving consumer surplus unchanged. c. increase consumer surplus. d. decrease producer surplus while leaving consumer surplus unchanged.
The term "fiscal federalism" refers to
a. deficit financing of government programs. b. the power of Congress to tax and to determine how tax revenues are spent. c. transferring money between levels of government (for example, from a state government to a local government). d. the system under which governments ask citizens to vote on major revenue-raising measures (for example, on issues of municipal bonds).
Which of the following results from a change in the business cycle, ceteris paribus?
A. Structural unemployment. B. Cyclical unemployment. C. Structural deficit. D. Frictional unemployment.
Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. 
Figure 7.8Refer to Figure 7.8. If the price of capital is $25, then along isocost line AB total cost is
A. $1,200. B. $1,500. C. $2,000. D. indeterminate from this information since the price of labor is not given.