Ceteris paribus, according to the law of demand, if the price of a computer game increases from $25 to $30, the:
a) Quantity demanded of computer games will decrease.
b) Demand curve for computer games will shift to the left.
c) Quantity demanded of computer games will increase.
d) Quantity demanded will not be affected.
Ans: a) Quantity demanded of computer games will decrease.
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If the Fed's policy reaction function equals r = .02 + p, where r is the real interest rate, p is the inflation rate. When the inflation rate is zero, then the real interest rate will:
A. set to equal 2%. B. set equal zero too. C. set to equal 4% D. be below the target value for the real interest rate.
Charlie's consumer surplus from the first slice of pizza he buys is greater than the consumer surplus from the second slice because of
A) decreasing marginal benefits. B) increasing marginal benefits. C) decreasing marginal costs. D) increasing marginal cost.
A reason why a perfectly competitive firm's demand for labor curve slopes downward is that
A) each additional unit of labor hired is less efficient than previously hired units. B) the extra cost of hiring additional units of labor increases as a firm hires more units of labor. C) in the short run, as more labor is hired, labor's marginal product falls because of the law of diminishing returns. D) the firm's demand curve for the product that uses labor is downward sloping.
What role have remittances and direct foreign investment played in Guatemala, Costa Rica, and Honduras?
What will be an ideal response?