What are the categories of total expenditure?
What will be an ideal response?
There are four categories: Consumption expenditure, spending by households; investment, spending by firms to buy new capital equipment or add to inventories; government expenditures on goods and services, spending by all levels of the government to buy goods and services; and net exports of goods and services, which equals the exports of goods and services minus the imports of goods and services.
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A university conducts a survey of students, which shows that a 10 percent tuition hike would lead to a 12 percent decrease in the enrollment
If the university wants to increase its total revenue, it should ________ tuition because the demand for education at this university is ________. A) raise; elastic B) not raise; elastic C) raise; inelastic D) not raise; inelastic
Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 10,000 units
A) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high. B) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low. C) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low. D) producers should lower the price to $1 in order to sell the quantity demanded of 10,000.
Asymmetric information problems arise
A) in horizontally integrated firms, but not vertically integrated firms. B) in vertically integrated firms, but not horizontally integrated firms. C) in both vertically and horizontally integrated firms. D) only in firms that do not have the advantage of either horizontal or vertical integration. E) only when a single firm is both horizontally and vertically integrated.
If you think that the economy is entering a recession, and fear that you might lose your job, explain how your actions of lowering your consumption level might actually increase the probability that you do lose your job