Suppose that in our economy: G = 1100, T = 900, S = 140, and NX = -90. How much of our final product is left for domestic firms to purchase for themselves?
A) 110
B) 200
C) 230
D) 50
E) 30
E
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Which of the following statements is NOT true?
A. Economic theory often makes unrealistic assumptions. B. Economists ignore details to focus on complex problems. C. Abstraction is not an important part of economic analysis. D. The word theory means different things to economists and to ordinary people.
What would happen in a free market system when production of a good generates negative externalities?
A) There is a shortage of the good. B) There is a surplus of the good. C) The equilibrium quantity of the good is less than the efficient amount. D) The equilibrium quantity of the good is more than the efficient amount.
Which of the following will NOT lead to a decrease in demand for a normal good?
A) an increase in income B) an increase in the price of an input C) a decrease in the price of a complement good D) an increase in the number of consumers
What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that coffee prevents heart attacks?
a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous. d. The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous.