Two goods are substitutes if:
A) an increase in the price of one leads to a shift to the left in the demand curve for the other.
B) an increase in the price of one leads to an increase in demand for the other.
C) an increase in the price of one will increase the supply of the other.
D) a fall in the price of one leads to a reduction in supply for the other.
Ans: B) an increase in the price of one leads to an increase in demand for the other.
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In a competitive industry buffeted by demand and supply shocks, prices increase and decrease, but economic profits tend to revert to zero. Hence, profits are exhibiting
a. Above-average return b. Positive earnings c. Mean reversion d. None of the above
A monopolist finds the price-output combination that maximizes its profits by
A) equating total revenue and total cost. B) equating marginal revenue and marginal cost. C) finding the combination for which the difference between marginal revenue and marginal cost is the greatest. D) equating price and marginal cost.
The quantity theory of money ________
A) is the product of classical economists B) links total income to a country's supply of money C) is derived from the equation of exchange D) all of the above E) none of the above
If the equilibrium price of an hour with a personal trainer is $45 and the market price is currently $55, then there is
A. a surplus of personal trainers. B. a shortage of personal trainers. C. equilibrium.