A monopolist ________ when its marginal revenue is zero.
A. maximizes total revenue
B. shuts down
C. is efficient
D. maximizes profit
Answer: A
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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 linear probability model is
A) the application of the multiple regression model with a continuous left-hand side variable and a binary variable as at least one of the regressors. B) an example of probit estimation. C) another word for logit estimation. D) the application of the linear multiple regression model to a binary dependent variable.
Each of the following is a source of financial capital for a corporation EXCEPT
A) issuing new stock. B) reinvestment of profit or retained earnings. C) issuing bonds or borrowing funds from a bank. D) dividends.
What do all expansions and recessions since 1950 have in common?
a. Changes in oil prices. b. Changes in interest rates. c. Changes in spending. d. Changes in productivity. e. None of the above.