Ceteris paribus, if income increases and as a result, the demand for good X increases and the demand for good Y falls,
A. Goods X and Y are complementary goods.
B. Good X is a normal good and good Y is an inferior good.
C. Good X is an inferior good and good Y is a normal good.
D. Goods X and Y are substitute goods.
Answer: B
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Why does unemployment tend to change when the level of output changes?
A. Persons wish to buy things, and if output falls, people need to work less to earn the income to buy the smaller output. B. Labor is an input, and if output falls, employers need fewer workers to make it, so the employment falls. C. As output rises, more people are more interested in buying goods and services, and so these people work more to obtain the income needed to buy things. D. Persons face the option of buying or working, so that when they do more of one, the other necessarily falls. E. When companies replace workers with machines, output rises and people take more vacation time prior to returning to work.
In the long run, firms in a perfectly competitive market will:
A. earn positive economic profits. B. exit if the price is lower than their lowest average total cost. C. attract other firms to the market if the price is equal to their lowest average total cost. D. not attract other firms if they are earning slightly positive economic profits.
Owners of municipal bonds
a. are not required to pay federal income tax on the interest income. b. usually receive a higher interest rate compared to bonds issued by corporations. c. usually receive a higher interest rate compared to stock issued by corporations. d. pay taxes on the dividends earned from these bonds.
The owner of a scenic waterfall is trying to decide whether to rent the site to a manufacturing firm as an industrial power source or to rent it to a recreational association, which would turn the site into a park and campground
Which of the following statements is true? A) An increase in the price of fossil fuels will increase the cost of renting it to the recreation association. B) Social welfare is maximized when the owner rents to the higher bidder. C) The cost to the owner of renting to one or the other depends entirely upon the owner's preferences between economic growth and recreational facilities. D) The owner can choose without regard to cost because the site is a free natural resource. E) The owner can choose without regard to cost insofar as the waterfall is privately owned.