A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $300, given the scenario described, the total consumer surplus would be:
A. $200.
B. $170.
C. $1,070.
D. None of these is true.
Answer: B
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The product life cycle theory of comparative advantage predicts that a new product will be first produced and exported by:
a. the nation that first demanded the new product. b. the first firm to successfully copy the technology. c. the nation in which it was invented. d. the countries with the most stable economies and the fewest restrictions on foreign trade. e. the company with the most extensive network of international distributors for the product.
Other things the same, if the price level rises, people
a. increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. b. increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. c. decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. d. decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.
In January 2015, Tim's Gyms, Inc owned machines valued at $1 million. During the year, the market value of the equipment fell by 30 percent. During 2015, Tim spent $200,000 on new machines. During 2015, Tim's gross investment totaled
A) $1 million. B) $300,000. C) $200,000 D) $900,000.
Which of the following is a correct characterization of socialism?
a. Tradition answers the basic economic questions. b. Markets are used exclusively to answer the basic economic questions. c. Central planning is seldom used to answer the basic economic questions. d. Government ownership of many resources and centralized decision-making answers the basic economic questions.