As disposable income increases, consumption spending will rise, but it will rise by less than disposable income if the MPS is positive
a. True
b. False
Indicate whether the statement is true or false
True
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Which of the following statements best describes excess demand, or shortage?
a. The area between the supply and demand curves above the equilibrium point is called excess supply, or surplus. b. The area between the supply and demand curves below the equilibrium point is called excess supply, or surplus. c. The area between the supply and demand curves to the right of the equilibrium point is called excess supply, or surplus. d. The area between the supply and demand curves to the left of the equilibrium point is called excess supply, or surplus.
A closed shop exists when the
a. employer is only permitted to hire union members b. union is the owner of the firm c. union members are not allowed to be hired d. employer can hire nonunion workers, but the workers must join the union within a certain time period e. firm goes bankrupt and workers lose their jobs
Economists would consider a firm with ______ to be making a normal profit.
a. a zero economic profit b. a zero accounting profit c. an economic profit that exceeds its accounting profit d. equal accounting and economic profits
With asymmetric information firms might be reluctant to improve the quality of their products because
A) it costs them more to produce the better quality product. B) they are not able to completely capture the benefits of the improvement. C) consumers do not value the better product. D) consumers are better informed about the product and value the new product less.