Which of the following is the best example of a pair of complements?
a. ?Milk and coffee
b. ?Coffee and tea
c. ?CDs and DVDs
d. ?Hiking boots and athletic shoes
e. ?Paperback books and hard cover books
Answer is a. ?Milk and coffee
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If a market system is functioning well, we can conclude that goods with
A. high opportunity costs tend to have high money costs. B. low opportunity costs tend to have high money costs. C. high opportunity costs tend to have low money costs. D. low opportunity costs tend to have zero money costs. E. high opportunity costs tend to have zero money costs.
Suppose a perfectly competitive firm can produce 20,000 bushels of corn a year at an output at which marginal cost equals marginal revenue. The market price of corn per bushel is $1.00
The firm's total costs per year are $50,000 and fixed costs per year are $25,000. In the short run, this firm should A) shut down. B) continue producing until the price of corn increases. C) produce 20,000 bushels of corn because, although they are losing money, they are losing less than if they shut down. D) produce 40,000 bushels to try to increase economic profit.
Because of a recession in Japan, net exports from the United States decrease by $10 billion. If the MPC is 0.75, how much less spending will occur in the U.S. economy in the second “round” of spending?
A. $17.5 billion B. $10 billion C. $7.5 billion D. $5.0 billion
Suppose the price elasticity of demand for Good A is 2.4 and the price elasticity of demand for Good B is 1.2. Which of the following statements is consistent with these values?
A. Good A is a luxury and Good B is a necessity. B. Good A is a good several days after a price increase while Good B is that same good several years after the price increase. C. Good A is ice cream and Good B is mint chocolate chip ice cream. D. Good A is salt and Good B is college tuition.