Why are nonprofit institutions counted as businesses in the circular flow?
What will be an ideal response?
Because like profit enterprises, they hire labor, employ capital, and rent land, buildings, or equipment. Thus they pay wages, interest, and rent.
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How has China operated in the foreign exchange market, why, and with what effect?
What will be an ideal response?
Suppose that Jane enjoys Diet Coke so much that she consumes one can every day. Although she enjoys gourmet cheese, she consumes it sporadically. If the price of Diet Coke rises, Jane decreases her consumption by only a very small amount. But if the price of gourmet cheese rises, Jane decreases her consumption by a lot. These examples illustrate the importance of
a. the availability of close substitutes in determining the price elasticity of demand. b. a necessity versus a luxury in determining the price elasticity of demand. c. the definition of a market in determining the price elasticity of demand. d. the time horizon in determining the price elasticity of demand.
At the competitive firm's profit-maximizing quantity of labor:
A. marginal profits are always positive. B. the value of the last worker's marginal product is greater than or equal to marginal cost of that input. C. the average product of labor is equal to the wage rate. D. the value of the last worker's marginal product is less than the marginal cost of that input.
A temporary decrease in the price of oil would be considered a:
A. long-run supply shock. B. demand shock. C. short-run supply shock. D. The changing price of oil would not affect any of these.