Economic growth is likely to entail:
A. a reduction in investment.
B. a decrease in the capital stock.
C. higher saving.
D. lower saving.
Ans: C. higher saving.
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Consumer equilibrium occurs at: a. the point where the indifference curve crosses the budget line from below. b. any point of intersection between an indifference curve and the budget line. c. the midpoint of every indifference curve
d. the point of tangency between an indifference curve and the budget line.
The idea that firms and resource suppliers in seeking to further their own self-interests in a competitive market economy also simultaneously promotes the public or social interest is a description of:
a. The "invisible hand" b. The guiding function of prices c. "Dollar votes" d. Capital accumulation
Suppose the price of an item in a perfectly competitive market is $2. For a firm in this market, MC = MR at an output of 100 units. The average total cost at this output level is $4 per unit, and TVC is $80. We may conclude that
A) the firm should shut down because TC > TR. B) the firm should continue to produce because P>AVC. C) the firm should shut down because its TFC is $320 and its TC is $400. D) the firm should shut down because other firms will enter the industry as the market is perfectly competitive.
The economy is undergoing a recession that has reduced consumers' incomes. In the computer chip market, this will lead to
A) an increase in price and a decrease in quantity. B) an increase in price and an increase in quantity. C) a decrease in price and a decrease in quantity. D) a decrease in price and an increase in quantity.