The chairman of the Federal Reserve System:
A. is approved by the House of Representatives and the Senate.
B. is independent of the Board of Governors, to maintain objectivity.
C. serves a four-year term.
D. All of these are true.
Answer: C
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We have worked a lot with homothetic production technologies. Suppose instead that a production process that uses capital and labor is quasilinear in capital and that capital is fixed in the short run. Then, assuming the firm currently profit maximizes at a given wage and rental rate, the short and long run slices of the production frontier are identical.
Answer the following statement true (T) or false (F)
You explain to your friend Haslina, who runs a catering service called "Meals in a Zip," about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices
She contends that the theory is incorrect because over the past two years she has raised the price of her catered meals and yet has seen a brisk increase in sales. How would you respond to Haslina? A) Haslina is making the mistake of assuming that correlation implies causation. B) I will explain to her that there are some omitted variables that have contributed to an increase in her sales such as changes in income. C) I will explain to her that she is making the error of reverse causality: it is the increase in demand that has enabled her to raise her prices. D) Haslina is right; she has evidence to back her claim. The theory must be erroneous.
The various models of oligopoly explain observed behavior in different industries, but none is satisfactory as a general theory of oligopoly
a. True b. False
Often the pricing of one product can adversely affect the revenue earned from another produced by the same firm. This is possible if
A) the firm can separate customers into separate markets. B) the firm can exploit the different elasticities of different groups of consumers. C) the firm cannot separate customers into separate markets. D) none of these choices.