All other things being equal, in the absence of public policy, an economy producing more than its sustainable capacity will eventually
a) reduce its long run capacity by wearing out its capital and depleting its natural resources
b) increase its long run capacity to meet the demand
c) experience wage and price increases and cutbacks in supply until output is at capacity
d) export the excess output to other countries
e) exhibit improved technology
c) experience wage and price increases and cutbacks in supply until output is at capacity
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Consumers in Beachland consume only two goods, sodas and DVDs. If they spend $10 on sodas and $90 on DVDs a month, how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9?
A) 9 sodas and 1 DVD B) 1 soda and 9 DVDs C) 10 sodas and 9 DVDs D) 10 sodas and 10 DVDs E) It is impossible to determine the market basket without information on the quantity of at least one of the two goods consumed.
Firms with internal labor markets have more flexibility in deciding the level and time profile of wages because
A. individuals tend to base their employment decisions on their entire career earnings. B. compensating wage differentials do not have to be paid in internal job markets. C. they have to pay the wage rate that equals the marginal revenue product of labor. D. firm-specific human capital is less costly than general human capital.
An externality is an event that
A. is external to economics. B. always brings harm to someone in the economy. C. is incidental to some market activity. D. harms the economy as a whole rather than a particular person.
Refer to the information provided in Figure 3.18 below to answer the question(s) that follow.
Figure 3.18Refer to Figure 3.18. The market is initially in equilibrium at Point B. If demand shifts from D2 to D1, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.
A. $3.00; 400 B. $4.00; 150 C. $4.00; 350 D. $3.00; 250