If you are given $20 and told to go to the store and buy as many potatoes as you can, the reason your demand curve for potatoes is downward sloping has mostly to do with
A. the real-balances effect.
B. the substitution effect.
C. diminishing marginal utility.
Answer: A
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In the Keynesian model, a firm's high menu costs cause
A) real-wage rigidity. B) full employment. C) price stickiness. D) efficiency wages.
Which of the following is true? a. The tax multiplier is smaller than the government spending multiplier
b. The government cannot stimulate consumer spending through tax cuts. c. The government spending multiplier is smaller than the tax multiplier. d. The government can stimulate consumer spending through decreases in transfer payments.
A single-period duopoly firm can choose output level A or B. The firm decides it will produce level A regardless of what the other firm produces. This decision may occur because
A) producing the output level A is a dominant strategy. B) this firm has simply decided to always produce at level A. C) Both A and B are possible. D) None of the above.
Use the following graph of the bicycle market to answer the question below.
S1 and D1 are the original supply and demand curves. D2 and D3 and S2 and S3 are possible new demand and supply curves. Starting from the initial equilibrium (point 1), which point on the graph is most likely to be the new equilibrium after the introduction of technological improvements in bicycle production and successful publicity campaigns by the government on the virtues of bicycling to work?
A. 3 B. 4 C. 5 D. 6