Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A. remains constant.
B. initially increases, then decreases.
C. decreases.
D. increases
Answer: D
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If the economy is in short-run disequilibrium, an economist following classical theory would advocate that the Federal Reserve make appropriate changes in the:
a. federal funds rate. b. reserve requirement. c. none of these choices. d. money supply.
An increase in the price of fuel increases the average cost of production of fabric produced by the Houchen Textile Company, a competitive firm. As a result of the increase in the price of fuel,
a. average cost of production will increase, but there will be no change in the profit-maximizing level of output. b. average cost of production will increase and the profit-maximizing level of output will decline. c. fixed costs of production will increase. d. average cost of production will increase, as will the profit-maximizing level of output.
The long-run equilibrium of monopolistic competition is characterized by
A) P = MC = ATC. B) P = MC > ATC. C) P = MR = MC. D) P = ATC > MC.
If real GDP in a closed economy is $40 billion, consumption is $20 billion, and government purchases are $10 billion, what is investment?
A) $10 billion B) $30 billion C) $40 billion D) $70 billion