In Figure 1.3, a shift of the production possibilities curve from PP1 to PP2 could be caused by
A. A decrease in the quantity of raw materials available.
B. The use of improved production technology.
C. A decline in the production skills of workers.
D. All of the choices are correct.
Answer: B
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Graphically, a firm's total revenue is represented by the:
a. triangle formed under the demand curve. b. rectangle formed under the demand curve at a given price and quantity combination. c. rectangle formed under the average-total-cost curve at a given ATC and quantity combination. d. triangle formed by a line segment between the demand and average-total-cost curves at any level of output. e. triangle formed by a line segment between the horizontal axis and the average-total-cost curves at any level of output.
The government proposes a tax on flowers in order to boost its revenue. Consumers will bear all of this tax if the:
a. demand for flowers is perfectly inelastic. b. supply of flowers is perfectly inelastic. c. demand for flowers is perfectly elastic. d. demand for flowers is unit elastic.
Budget projections for 2014-2020 indicate both higher levels of government spending and large budget deficits. Non-Keynesian economists argue that this will lead to
a. lower taxes, which will reduce aggregate supply and retard long-term growth. b. growth rates above the historic average for the decade. c. an increase in aggregate demand and real output. d. higher interest rates, higher taxes, and sluggish future growth.
Refer to the information provided in Table 14.2 below to answer the question that follows. Table 14.2B's Strategy ?AdvertiseDon't Advertise??A's profit $100 millionA's profit $200 million?AdvertiseB's profit $100 millionB's profit $50 millionA's Strategy????Don'tA's profit $50 millionA's profit $75 million?AdvertiseB's profit $200 millionB's profit $75 millionRefer to Table 14.2. If both firms follow a maximin strategy, the equilibrium in the game is
A. (Advertise, Advertise). B. (Don't Advertise, Advertise). C. (Advertise, Don't Advertise). D. (Don't Advertise, Don't Advertise).