Which of the following statements is false?
A) An upward-sloping supply curve graphically represents the law of supply.
B) A vertical supply curve graphically represents the law of supply.
C) If income rises and good X is a normal good, then the demand for good X will rise.
D) If income falls and good Y is an inferior good, then the demand for good Y will rise.
B
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Conventional budget accounting practices tend to overstate deficits in inflationary periods because they
A. ignore the inflation tax. B. confuse repayment of principal with real interest expenditures. C. double count some expenditures. D. understate real interest rates.
Janie must choose to either mow the lawn or wash clothes. If she mows the lawn, she will earn $30, and if she washes clothes, she will earn $45. She dislikes both tasks equally and they both take the same amount of time. Janie will therefore choose to ________ because it generates a ________ economic surplus.
A. mow the law; smaller B. mow the lawn; bigger C. wash clothes; smaller D. wash clothes; bigger
The principle of marginal analysis refers to:
a. a method of analysis that divides large problems into smaller, more manageable ones. b. the notion that problems facing a group of individuals can be effectively analyzed by focusing on only a small subsample of the group. c. the result that the optimal quantity of an activity is that at which marginal benefit is equal to marginal cost. d. the result that the optimal quantity of an activity is that at which the net benefit of the representative, or marginal, individual is maximized.
In the long run, diminishing returns would:
A. not exist because no input is held constant. B. not exist because all inputs are held constant. C. still exist at a lesser degree because inputs are allowed to vary. D. exist at a greater degree, because all inputs are allowed to vary.