If Billie buys a smoothie at the corner cafe, which of the following best relates this transaction to the circular flow diagram?
a. Goods flow from the product market, and money flows from households.
b. Resources (land, labor, capital) flow from households, and money flows from businesses.
c. Income flows from the factor market, and goods flow into the factor market.
d. Resources flow into households, and back into the goods and services market.
a
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Suppose the price of a scooter is $200 and Cora Lee is willing to pay $250. Cora Lee's
A) consumer surplus from that scooter is $200. B) consumer surplus from that scooter is $50. C) marginal benefit from that scooter is $100. D) consumer surplus from that scooter is $150. E) consumer surplus from that scooter is $250.
In the short run, firms expand their production when the price level rises because
A) the money wage rate remains constant so the higher prices for their products makes it profitable for firms to expand production. B) each firm must keep its production up to the level of its rivals, and some firms will expand production as the price level increases. C) the higher prices allow the firm to hire more workers by offering higher wages, thereby increasing productivity and profits. D) firms can increase their profits by increasing their maintenance.
If a country's central bank wants to stimulate spending in the economy, it should:
A) increase the amount of assets banks should keep on reserve at all times. B) decrease taxes. C) lower interest rates. D) increase government spending.
The opportunity cost of attending college
A) consists of the tuition costs only. B) consists of the tuition costs plus the costs of room and board and other expenses. C) is zero, if the student receives a scholarship that covers the costs of tuition, room and board, and other expenses. D) varies from person to person. E) both b and c