If the price a firm charges in a perfectly competitive industry is greater than average total cost:
A. the firm is earning an economic profit equal to zero.
B. the firm is earning an economic profit greater than zero.
C. the firm is earning an economic profit less than zero.
D. it is not possible to determine anything about profits.
Answer: B
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In a steady state,
A. consumption per worker can change, but the capital-labor ratio is constant. B. capital and labor, by definition, are inversely related to one another. C. both consumption per worker and the capital-labor ratio are constant. D. consumption per worker is constant, but the capital-labor ratio can change.
The substitution effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded
Indicate whether the statement is true or false
Which of the following is a flow in the circular flow model?
A) the flow of profit and the flow of revenue B) the flow of income earned by firms and the flow of expenditures earned by households C) the flow of revenue received by firms and the flow of payments to resource owners D) the flow of goods and services from households to firms
In 1990, Britain joined the ERM. If the German Bundesbank increased interest rates, what will Britain have to do in order to maintain its exchange rate peg?
A) The British would be forced to increase their interest rates. B) The British would increase their money supply. C) The British would have to lower their interest rates. D) The British government would have to use expansionary fiscal policy.