Explain what a model is
What will be an ideal response?
A model is a formal statement of a theory. It is generally a mathematical statement of a presumed relationship between two or more variables.
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When compared with a perfectly competitive market with identical costs of production, a pure monopoly will produce ________.
A. more output and charge the same price B. less output and charge the same price C. less output and charge a higher price D. more output and charge a higher price
A key element of the classical growth theory is that
A) low taxes promote economic growth. B) an increase in population leads to increase in labor supply and a decline in real GDP per person. C) economic growth can be sustained as long as government intervention does not occur. D) increases in technology drive economic growth. E) market forces drive economic growth.
What is meant by variable cost? What kinds of things might be included in variable cost?
What will be an ideal response?
When the macroeconomy is doing poorly (as it was in 2009), profits of existing firms decrease, creating an incentive for existing firms to exit unprofitable markets
This in turn makes it more difficult for the remaining firms to mark up price over average or marginal cost. Indicate whether the statement is true or false