Using Figure 2 above, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE3 might be:
A. exports decrease.
B. consumption spending increases.
C. investment decreases.
D. imports increase.
Answer: B
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The law of increasing opportunity cost results in a constant slope of the production possibilities curve.
a. true b. false
A monopolist sells a homogeneous good in several distinct submarkets, and the elasticities of demand differ in these submarkets. If the monopolist selects the rate of output to sell in each submarket by equating marginal revenue and marginal cost, then
A. it is not price discriminating, but merely price differentiating. B. customers in markets with more elastic demand will pay higher prices than customers in markets with less elastic demand. C. customers in markets with more elastic demand will pay lower prices than customers in markets with less elastic demand. D. all customers in all markets end up paying the same price.
The natural unemployment rate is higher if
A) many of the new jobs created require skills possessed by the available labor. B) there are fewer two-income households. C) unemployment benefits become more generous. D) efficiency wages are lower. E) there is a decrease in the working-age population.
If the cross elasticity of demand between goods X and Y is positive and between goods X and Z is negative, then X and Y are ________ and X and Z are ________
A) price inelastic; complements B) complements; substitutes C) substitutes; complements D) price inelastic; income elastic