In the model of perfect competition, the market demand curve is found by
A) a marketing analysis.
B) taking the demand curve of a "representative consumer" and expanding it by the number of consumers of the good.
C) horizontally summing the demand curves of individual consumers.
D) horizontally summing the supply curves of individual firms.
Answer: C
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While specialization and exchange were very important to Adam Smith in 1776, they have largely lost their importance in the 21st century.
Answer the following statement true (T) or false (F)
Suppose that a person in the United States earns $5,000 and faces an income tax rate of 25 percent. If that person saves $2,000 and invests it at 12 percent then he or she will pay
A) less in taxes because of the saving. B) tax only on the income spent. C) more in taxes than if there had been no saving. D) tax only on the amount saved.
In the long run,
A. all of the firm’s input quantities are variable. B. the firm can vary the quantities of some but not all inputs. C. managers become less efficient. D. the total cost of producing any given level of output is greater than or equal to the short-run total cost of producing that level of output.
Equilibrium GDP is reached when
a. aggregate expenditure exceeds GDP b. aggregate expenditure is less than GDP c. aggregate expenditure equals the level of output d. the level of output is greater than aggregate expenditure e. the level of output is less than aggregate expenditure