The "information barrier" that is the root cause of business cycles in the Lucas model is that
A) workers observe the prices of what they personally buy, but cannot observe the general price level.
B) workers do not know when changes in the price level mean changes in the prices of the goods they buy.
C) firms do not know when changes in the price of the good they sell matches changes in the price level and thus their marginal cost.
D) firms do not know if a change in the price level will have any effect on their marginal cost and thus their willingness to supply.
C
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Suppose a soccer coach has been making $25,000 per year but gives up his coaching job in order to make lace doilies. If his revenue from the sale of these doilies is $50,000 and his materials cost $20,000 . then his economic profit is
a. $5,000 b. $25,000 c. $30,000 d. $50,000 e. $80,000
What is the balance of trade is sometimes called?
a. balance of payments b. balance of exchange c. balance of financial capital d. balance of goods and services
In order for a market to be classified as an oligopoly,
a. there must be fewer than 10 firms b. the four largest firms must have 90 percent of the market c. there must be fewer than 5 firms d. the firms must be strategically interacting e. the firms must be strategically independent
If the economy were producing at point E and moved to point D,
A. the unemployment rate would increase.
B. the unemployment rate would decrease.
C. the production possibilities would shift outward.
D. the economy would shift resources from producing butter to increasing the production of guns.