Given the labor force, either more capital or better technology will shift the production function downward
a. True
b. False
Indicate whether the statement is true or false
False
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Stock market crashes lead us to believe that
A) factors other than market fundamentals have an effect on asset prices. B) unexploited profit opportunities never exist. C) crashes are always predictable when market participants behave rationally. D) bubbles are a natural outcome of an efficient market.
Other things the same, if the price level is lower than expected, then some firms believe that the relative price of what they produce has
a. decreased, so they increase production. b. decreased, so they decrease production. c. increased, so they increase production. d. increased, so they decrease production.
Competition is present when
A) subsidies assure that inefficient firms remain active in the market. B) there is little incentive to introduce new products and discover better ways of doing things. C) the market is characterized by rising prices and declining product quality. D) freedom of entry and rival firms are present in a market.
If a good is a necessity, the income elasticity of demand must be
A. positive. B. negative but less negative than -1. C. negative and more negative than -1. D. zero.