One reason economists distinguish between micro and macro is supply and demand are:
A. unrelated to one another.
B. more interdependent in individual markets (micro).
C. more interdependent in the aggregate (macro).
D. never interdependent.
Answer: C
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Refer to Scenario 17.5. Under which of the following payment schemes would workers have an incentive to exert high effort?
A) A guaranteed wage equal to $0 B) A guaranteed wage equal to $5000 C) A guaranteed wage equal to $10,000 D) A wage equal to the income earned, minus $4000 E) A wage equal to $0 if revenue is $5000, $2000 if revenue is $7000, and $8000 if revenue is $13,000
When no property rights exist
A) no one has an economic incentive to care for common property, and an externality may well occur. B) there will be no production. C) externalities will be internalized by voluntary arrangements among a small group of parties. D) society will produce beyond the production possibilities frontier, but the allocation of resources is not apt to be optimal.
If consumers spend a small proportion of their income on a good, the demand curve for the good will be: a. elastic
b. inelastic. c. perfectly inelastic. d. unit elastic.
If a monopolized industry should become purely competitive without any change in cost conditions:
A. both price and quantity produced will decrease. B. both price and quantity produced will increase. C. price will increase and quantity produced will decrease. D. price will decrease and quantity produced will increase.