If June can earn $1,500 in revenue from painting two houses, how much can she earn in revenue from painting three houses? (Assume she is just one housepainter in a large market of housepainters, and that she can easily find a third customer.)
A. More than $2,250.
B. Exactly $2,250.
C. Exactly $4,500.
D. Less than $2,250.
Answer: B
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When the inflation rate is zero, the
A) real interest rate is greater than the nominal interest rate. B) real interest rate is less than the nominal interest rate. C) nominal interest rate is zero. D) real interest rate equals the nominal interest rate.
Suppose the economy is initially in long-run and short-run equilibrium. If the Fed decides to pursue a contractionary monetary policy, we will see
A) bond prices fall, interest rates fall, aggregate demand remains unchanged as consumption spending decreases, but investment spending increases. GDP remains constant in both the short run and the long run, but the price level falls in both. B) bond prices fall, interest rates rise, aggregate demand falls as investment and consumption spending decrease, and real GDP and the price level decreasing in the short-run, but only the price level decreasing in the long run. C) bond prices fall, interest rates rise, aggregate demand falls as investment spending decreases and consumption spending remains unchanged, and real GDP and the price level decrease in the short run, but only the price level falls in the short run. D) interest rates rise but no change in bond prices. Aggregate demand falls as consumption spending and investment spending decrease, and the price level and real GDP fall in both the short run and the long run.
Which of the following observations is not true?
A. Demand curve of the perfectly competitive firm is perfectly elastic. B. There is only one price for a product in a perfectly competitive market. C. A firm in a perfectly competitive market can sell as much as it wants at market price. D. Demand curve of the perfectly competitive industry is perfectly elastic.
Which of the following would cause the investment demand curve to shift?
a. Animal spirits (expectations). b. Technological change. c. Change in business taxes. d. All of these.