Suppose a Chinese restaurant routinely provides free fortune cookies to its customers. The economic way of thinking suggests the restaurant is
A) engaging in predatory pricing of its meals.
B) attempting to increase its total profit.
C) selling Chinese food below cost.
D) doing all of the above.
E) almost certainly doing none of the above.
B
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When Brenda was in college, she worked part-time delivering pizzas and she ate five boxes of macaroni and cheese per week. After graduation, she became a high school teacher and ate only two boxes of macaroni and cheese per week. From this information,
a. macaroni and cheese is a normal good for Brenda b. the law of demand applies to macaroni and cheese for Brenda c. macaroni and cheese are substitute goods d. macaroni and cheese is an inferior good for Brenda e. Brenda's income elasticity of demand for macaroni and cheese is positive
According to the Laffer curve, when the tax rate is 100 percent, tax revenue will be
a. 0 b. at a maximum c. the same as they would be at a 50 percent tax rate d. greater than they would be at a 50 percent tax rate e. the same as they would be at a 20 percent tax rate
Deflation means a decrease in:
a. homes, autos, and basic resources. b. the prices of all products in the economy. c. the general level of prices in the economy. d. the rate of inflation.
Which of the following types of expenditure is most likely NOT determined by an accelerator model?
A) consumer durable spending B) inventory investment C) residential housing construction D) consumer spending on food