The demand for mansions is elastic because a small percentage change in price results in a large change in quantity demanded
a. True
b. False
Indicate whether the statement is true or false
True
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At the profit-maximizing level of output for a perfectly competitive firm, price equals marginal cost. Which of the following is also true?
A) Total revenue equals total cost. B) Marginal profit equals marginal cost. C) Average revenue equals average total cost. D) The difference between total revenue and total cost is the greatest.
The consumer price index and the GDP deflator are two alternative measures of the overall price level. Which of the following statements about the two measures is correct?
a. The two measures are constructed differently, but they always indicate the same inflation rate. b. The substitution bias applies equally to both measures. c. A change in the price of Korean televisions is reflected in the U.S. consumer price index but not in the U.S. GDP deflator. d. All of the above are correct.
Refer to the graphs shown.
If product demand increases from D1 to D2, causing the product price to increase, firm A (a supplier of this product) will:
A. decrease employment because its MRP curve will shift leftward. B. pay a lower wage rate and increase employment from q3 to q4. C. increase employment because its MRP curve will shift rightward. D. pay a higher wage rate and reduce employment from q2 to q1.
If the government were to decrease its spending, it would expect aggregate demand to:
A. rise, and thus GDP to fall. B. rise, and thus GDP to rise. C. fall, and thus GDP to rise. D. fall, and thus GDP to fall.