Aggregate supply is the:
A. total quantity of the production of all the households in the economy.
B. market value of the total quantity of goods and services supplied in the economy.
C. total quantity of goods and services demanded in the economy.
D. market value of the total quantity of goods and services demanded in the economy.
Answer: B
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For a firm in monopolistic competition, the marginal cost curve intersects the average total cost curve
A) at the minimum average total cost. B) to the left of the minimum average total cost. C) to the right of the minimum average total cost. D) at no point.
If the price level does not fall or only falls very slowly, then the result will be a prolonged period of
A. inflation whenever supply increases. B. production below potential GDP. C. production above potential GDP. D. rapid price increases when demand changes.
Suppose that the current dividend for a stock is Dtoday, the expected dividend growth rate is r, and the interest rate is i. If we ignore risk, which of the following represents the dividend- discount model formula for the fundamental price of a stock?
A. Dtoday (1 + g) / (i - g) B. Dtoday / (i - g) C. Dtoday / (i + g) D. (i + g) / Dtoday
Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes. Due to differences in caffeine levels, his MRS of tea for coffee equals 2. If coffee and tea sell for the same price, Johnny will
A) spend all $30 on tea. B) spend all $30 on coffee. C) spend $20 on coffee and $10 on tea. D) be indifferent between any bundle of coffee and tea costing $30.