If real GDP increases from $5 billion to $5.25 billion and the population increases from 2 million to 2.02 million, real GDP per person increases by ___ percent
A. 5.0
B. 1.0
C. 2.5
D. 4.0
D Real GDP grows by 5 percent and the population grows by 1 percent, so real GDP per person grows by 4 percent.
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Which of the following situations will arise in the domestic market following the imposition of an import ban?
A) imports decrease, domestic production increases, prices increase B) imports increase, domestic production increases, prices increase C) imports increase, domestic production decreases, prices decrease D) imports decrease, domestic production increases, prices decrease
What does the sign (positive/negative) of the cross elasticity of demand tell us about the relationship between two goods?
What will be an ideal response?
Economic models are only useful in analyzing government policy
A) True. Individuals are irrational and therefore economic models are useless. B) False. Economic models can be used to predict individual and firm behavior. C) True. Economists only model those questions for which they are hired. D) False. Economic models are not even useful in analyzing government policy.
You are hired as an economic consultant to The Pampered Pet Shop. The Pampered Pet Shop operates in a perfectly competitive industry. This firm is currently producing at a point where market price equals its marginal cost. The Shop's total revenue exceeds its total variable cost, but is less than its total cost. You should advise the firm to
A. produce in the short run to minimize its loss, but exit the industry in the long run. B. cease production immediately because it is incurring a loss. C. lower its price so that it can sell more units of output. D. raise its price until it breaks even.