If price exceeds marginal cost, we say that a firm receives
a. Extraction surplus
b. User costs
c. Consumer surplus
d. Royalty payments
e. Resource rents
Ans: e. Resource rents
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If the consumption function is C = 90 + 0.75y, then the marginal propensity to consume is
A) 0.2.5. B) 0.75. C) 67.5. D) 90.
When demand is unit elastic, a 10 percent change in the price of the good
A) will cause a change in quantity demanded of less than 10 percent. B) will cause a change in quantity demanded equal to 10 percent. C) will cause a change in quantity demanded greater than 10 percent. D) will not cause any change in quantity demanded.
The slope of the short-run Phillips curve is consistent with:
a. the long-run trade-off between the unemployment rate and inflation. b. the long-run trade-off between inflation and GDP. c. the short-run trade-off between the money supply and interest rates. d. the short-run trade-off between business productivity and wage contracts. e. the short-run trade-off between the unemployment rate and inflation.
The demand curve for money:
A. shows the amount of money balances that individuals and businesses wish to hold at various levels of private investment. B. reflects the open market operations policy of the Federal Reserve. C. shows the amount of money that households and businesses wish to hold at various rates of interest. D. indicates the amount that consumers wish to borrow at a given interest rate.