Why does an economist create a market demand curve?
(A) To show how various conditions can change the demand for a good.
(B) To learn what demands the market will make under unusual conditions.
(C) To have an idea of how a market would change if conditions in an area changed.
(D) To predict how people will change their buying habits when prices change.
Ans: (D) To predict how people will change their buying habits when prices change.
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A factory produces 1,000 radios a year, AVC = $10 and TFC = $5,000. The factory’s TC
A. equals $15. B. equals $5,005. C. equals $15,000. D. cannot be determined from the information given.
Real wages increased in industrialized countries in the twentieth century because the demand for labor:
A. decreased, while the supply of labor increased. B. increased more slowly than the supply of labor increased. C. increased, while the supply of labor decreased. D. increased more rapidly than the supply of labor increased.
The principle that individuals and firms pick the activity level where the incremental benefit of that activity equals the incremental cost of that activity is known as the:
A. marginal principle. B. principle of opportunity cost. C. principle of diminishing returns. D. spillover principle.
The marginal propensity to consume must always be larger than the marginal propensity to save.
Answer the following statement true (T) or false (F)