In the classical model, what happens to the level of real GDP if aggregate demand increases?
A) Real GDP increases.
B) Real GDP decreases.
C) Real GDP would increase at first, then decrease.
D) Real GDP would remain the same, at equilibrium.
D
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In the Cournot model, if a firm's marginal cost increases, its best-response function will
A) shift inward. B) not change. C) shift outward. D) The shift is ambiguous.
A local restaurant offers an "all you can eat" Sunday brunch for $12. Jenica eats two servings but leaves half of a third helping uneaten. Why? Select one:
a. Her marginal value of brunch has fallen below $12. b. Her marginal value of additional food has fallen below $4.00 ($12 divided by 3 servings). c. Her marginal value of an additional bite of food has fallen to zero. d. The total value she places on brunch today exactly equals $12.
If a good has a price elasticity of demand coefficient less than one, then:
A. this good has an elastic demand. B. this good has an inelastic demand. C. a 10 percent increase in the price will result in a greater than 10 percent decrease in the quantity demanded. D. the demand curve will be vertical.
An economist secures volunteers from her college campus and divides them into two groups that are ushered into different rooms. Both groups are given a test. Those in the first group who score 90 percent or more receive an Apple iPad. Upon exiting the room, those given iPads are offered the choice of receiving $150 in exchange for the iPad. Only a few take the exchange. Those in the second group who score 90 percent are offered either an Apple iPad or $150. About half the students choose $150. The professor uses this data to support a principle known as the endowment effect. The professor is engaging in:
A. natural experiments. B. the economic decision rule. C. experimental economics. D. a market coordination mechanism.