Costs that spill over to third parties are called
A) opportunity costs.
B) external costs.
C) variable costs.
D) public costs.
Answer: B
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If 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand?
A. 1/3. B. 30. C. 3. D. 1/6.
Deregulation has contributed to
A) an increase in union membership. B) declines in union membership. C) higher wages in unions. D) an increase in union power.
The Bertrand model of price setting assumes that a firm chooses its price
A) independently of what price other firms charge. B) subject to what price rival firms are charging. C) so that joint profits are maximized. D) without considering the shape of the demand curve.
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.