Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase?
A) a drought that sharply reduces cotton output
B) an increase in consumer income
C) a decrease in consumer income
D) unusually good weather that results in a bumper crop of cotton
B
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Refer to Figure 18-1. Suppose that the U.S. government deficit decreases, causing interest rates in the United States to fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?
A) Supply would increase, demand would increase and the economy moves from D to A to B. B) Supply would decrease, demand would increase and the economy moves from A to D to C. C) Demand would increase and the economy moves from A to B. D) Demand would decrease and the economy moves from B to A.
Concerning the maximization of output subject to a cost constraint, which of the following statements (if any) are true?
a. At the optimal input combination, the slope of the isoquant must equal the slope of the isocost line. b. The optimal solution occurs at the boundary of the feasible region of input combinations. c. The optimal solution occurs at the point where the isoquant is tangent to the isocost lines. d. all of the above e. none of the above
In the long run, changing technology on average has led to: a. lower employment and lower wage rates
b. higher employment and lower wage rates. c. lower employment with wage rates unchanged. d. higher employment with wage rates unchanged. e. higher incomes and more leisure time.
According to the textbook, if a wave of pessimism cause stocks to become generally overvalued, the best investment strategy is to
A. sell as many stocks as possible. B. continue to diversify your investment portfolio. C. buy only government bonds. D. hold all available stocks and sell them later.