Which of the following is NOT an assumption under which the production possibilities curve is drawn?
A.) The economy's resources are fully employed.
B.) The price level is stable.
C.) Technology is being held constant.
D.) The supplies of factors of production are fixed.
E.) The trade-off of one good for another is not constant.
B.) The price level is stable.
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A recession is a slowdown in the rate of economic growth that
A) causes total income to fall even though total output has not declined. B) is unintended and therefore disappoints people's expectations. C) lowers the nominal level of gross domestic product. D) persists longer than one year. E) results in fewer people being employed.
If the demand for a product decreases and the supply of the same product increases, the equilibrium quantity will increase
Indicate whether the statement is true or false
The marginal propensity to consume describes ________
A) the tendency to consume fringe, or unusual items B) the impact of a change in spending on income C) the impact on consumption resulting from a change in income D) lifetime consumption resources
A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $5.50. What do you recommend this firm do?
A) Increase production above the current output rate, because MC = MR at this rate of output. B) Continue to produce the current output rate, because P > AVC. C) Shut down, because AVC > P. D) Shut down, because ATC > P.