Economists normally assume that the goal of a firm is to
a. maximize its total revenue.
b. maximize its profit.
c. minimize its explicit costs.
d. minimize its total cost.
b
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Which of the following best describes the "wealth effect"?
A) When the price level falls, the real value of household wealth falls. B) When the price level falls, the real value of household wealth rises. C) When the price level falls, the nominal value of household wealth rises. D) When the price level falls, the nominal value of household wealth falls.
The "gang system" is an example of:
a. specialization and division of labor. b. diminishing marginal product. c. the envelope theorem. d. Gresham's law.
As the general price level in an economy rises, the aggregate quantity demanded of goods and services falls because
a. the prices of domestic goods have risen relative to foreign goods, causing exports to fall and imports to rise. b. higher interest rates caused by an increase in the demand for money balances causes a reduction in current investment and consumption. c. the value of money will fall, reducing the real wealth and, thus, the consumption of persons holding money balances. d. all of the above are correct.
A market demand curve reflects the
A) marginal private benefits of consuming a product. B) external benefits of consuming a product. C) marginal social benefits of consuming a product. D) sum of private and social benefits of consuming a product.