Why is it important to distinguish nominal GDP from real GDP?
A distinction between nominal GDP and real GDP is important to know whether the economy has really grown or not. Only increases in real GDP indicate a true expansion in our nation's production that may translate into an increase in our average absolute standard of living.
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Refer to the scenario above. Which of the following combinations will lie on Jack's production possibilities curve?
A) 10 paintings and 6 sculptures B) 5 paintings and 1 sculpture C) 10 paintings only D) 10 sculptures only
The demand curve is given by:
QD = 5000 - 10 P Find equations for: a. Total revenue b. Marginal revenue
If labor is 80 percent of total costs in industry A and 20 percent in industry B, then other things equal, we would expect the elasticity of demand for labor to be
A) greater in industry A than in industry B. B) greater in industry B than in industry A. C) the same in both industries. D) uncertain since no general relationship exists between cost shares and elasticities.
If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should:
A. raise prices 1 percent. B. lower prices 1 percent. C. raise prices until the elasticity becomes very high. D. keep the price where it is.