The demand for home computers has increased, yet the price has fallen. Explain this apparent paradox.
What will be an ideal response?
Supply has increased by more than demand has increased. Technological advances in computer hardware has led to a huge increase in supply, more than offsets any upward pressure on price due to the increase in demand.
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Which of the following curves are U-shaped?
i. average variable cost curve ii. average fixed cost curve iii. average total cost curve A) i and ii B) i and iii C) ii and iii D) i, ii, and iii E) only ii
The lack of long-term economic development prevalent among many LDCs is evidence that relatively efficient economic markets may lead to socially undesirable outcomes
Indicate whether the statement is true or false
A firm with a flat demand curve
A) has no brand loyalty. B) has weak brand loyalty. C) has strong brand loyalty. D) isn't really worried about brand loyalty; flat demand curves guarantee zero profit.
The difference between an absolute price and a relative price is that:
a. absolute prices are based on costs of production, relative prices are based on market exchange. b. absolute prices are in terms of currency, relative prices are in terms of another good. c. absolute prices are in terms of another good, relative prices are in terms of currency. d. absolute prices never change, relative prices change with inflation.