Which of the following is an intermediate good?
A. Tomatoes sold in the grocery store that you use to make salsa.
B. Tomatoes grown in your garden that you use to make salsa.
C. Tomatoes sold to a factory and used in the production of spaghetti sauce.
D. Tomatoes you buy at a local farmer's stand that you use to make salsa.
Answer: C
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A perfectly competitive industry achieves allocative efficiency because
A) goods and services are produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it. B) firms carry production surpluses. C) it produces where market price equals marginal production cost. D) goods and services are produced at the lowest possible cost.
Good A is a normal good. The demand curve for good A:
A) slopes downward. B) usually slopes downward, but could slope upward. C) slopes upward. D) usually slopes upward, but could slope downward.
If the exchange rate measured in euros per dollar increases, then
A) the dollar depreciates relative to the euro. B) the euro appreciates relative to the dollar. C) the euro depreciates relative to the dollar. D) neither currency appreciates or depreciates.
Which of the following would be an appropriate discretionary fiscal policy to use when the economy is in a recession?
a. Increased government spending. b. Higher taxes. c. A balanced-budget reduction in both spending and taxes. d. An expansion in the money supply.