An automobile manufacturer uses land, labor, capital, and entrepreneurial ability to produce cars and trucks. If the price of trucks increases, the automobile manufacturer would not _____
a. pay a lower wage rate to labor
b. increase truck production
c. hire more workers
d. increase capital used in production
e. increase land used in production
a
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Suppose that consumers expect that the price of a product will increase in the future. The result is that
A) the current supply of the product decreases. B) the current demand for the product decreases. C) the current demand for the product increases. D) the current supply of the product increases.
Expenditures on U.S. produced steaks, shoes, and doctor visits are most likely classified as
A) net imports of goods and services. B) investment. C) government expenditure on goods and services. D) net exports of goods and services. E) consumption expenditure.
You offer an extended warranty for your product that is purchased by a few customers. If the product typically fails 2% of the time, the claim rate will exceed 2% of warranty purchasers because
a. adverse selection will lead those who are more reckless to purchase the warranty b. moral hazard will lead those who purchase to be more reckless c. you systematically underestimate product failure rates d. Both A&B
As interest rates increase,
A. firms will want to borrow more. B. firms will want to invest more. C. future revenues become more profitable. D. future revenue become less profitable.