Refer to the circular-flow model in Exhibit 1.1. If A represents product markets, and D represents firms, then the flow from A to D is _____
a. revenue.
b. expenditures.
c. labor, capital, and natural resources.
d. goods and services.
e. wages, interest, rent, and profit. check image at top
Answer: a. revenue.
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Economic profits are calculated as:
A. total revenue minus explicit costs. B. total revenue minus all opportunity costs, explicit and implicit. C. total revenue minus implicit costs. D. None of these is true.
Unit elastic demand occurs when
a. a one-unit increase in price leads to a one-unit decrease in quantity demanded b. a 1% increase in price leads to a one-unit decrease in quantity demanded c. price elasticity of demand is positive d. price elasticity of demand is exactly zero e. price elasticity of demand is exactly -1
If a decrease in the price of good Y causes the demand for good Z to decrease, this indicates that:
a. Y and Z are complements. b. Y and Z are substitutes. c. Y and Z are unrelated. d. Y is a normal good and Z is an inferior good.
You save $10 on gas every week because you take the bus to school. You have class 5 days a week. What is your average benefit per day of taking the bus to school?
A. $0 B. $5 C. $2 D. $10