In general, microeconomic theory assumes that firms attempt to maximize the difference between
a. total revenue and accounting costs.
b. price and marginal cost.
c. total revenues and economic costs.
d. economic costs and average cost.
c
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Barbara, the consummate hostess, proudly announced as she served dessert, "A port is often the perfect end to a meal, sipped with a piece of my scrumptious chocolate cake." Evidently, Barbara views port and chocolate cake as
A) luxury items. B) complementary goods. C) necessities. D) substitutes for other desserts.
If an exhaustible resource is scarce, has constant marginal cost over time, and is sold in a competitive market, then
A) its price increases over time. B) its price will not be a function of the interest rate. C) its price moves independently of past prices. D) its price equals marginal cost.
Assume that beer is an inferior good. If the price of beer falls, then the substitution effect results in the person buying ________ of the good and the income effect results in the person buying ________ of the good
A) more, more B) more, less C) less, more D) less, less
____ is a school of economic thought that uses equation of exchange to analyze the macroeconomic data.
A. Mercantilism B. Monetarism C. Supply side economics D. Keynesianism