Figure 6.5 illustrates the market for sugar. With free trade, total surplus in the market would be shown as area:
A. ABC.
B. AEF.
C. AEG.
D. FEG.
Answer: C
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Which of the following statements is true?
A) Data are facts established by observation and measurement. B) Theories are statistics that describe the real world. C) Hypotheses are predictions that can be tested with data. D) Empirical evidences are facts, measurements, or statistics that describe the world.
Refer to Figure 14-1. Should Lexus lower its price in order to deter BMW's entry into the luxury hybrid automobile market?
A) Yes, it will drive BMW out of the market. B) No, it should keep the same price and work to capitalize on its brand loyalty. C) In terms of profit earned, it makes no difference whether Lexus lowers its price or not; in either case it will make $280 million profit if BMW enters. D) No, because BMW will enter the market regardless of Lexus' decision about its price.
According to Ricardo's explanation of land rent, what happens when the demand for land increases?
A) The supply curve shifts to the right just enough to keep the price per acre constant. B) Revenues to owners of land increase but economic rent declines. C) The amount of economic rent stays constant, constrained by a perfectly inelastic supply curve. D) Both revenues to owners of land and economic rent increase.
An increase in the price level
a. increases investment spending, thereby shifting the AD curve to the left b. does not shift the AD curve c. causes the government's budget deficit to fall d. increases investment spending, thereby shifting the AD curve to the right e. shifts the AS curve outward