If a rising price leads to falling revenues, then demand is elastic.
a. true
b. false
Answer: a. true
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Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. What is the opportunity cost to Cathy of making a cake?
A. 1 pie. B. 1.5 pies. C. 2/3 of a pie. D. 1.33 pies.
For a firm with market power, advertising expenditures affect all of the following except which one?
A) total cost B) demand curve C) marginal cost D) marginal revenue
Exchange rates will affect imports and exports, and thus affect aggregate ______ in the economy.
a. production b. sales c. supply d. demand
Central planning is an ineffective method to organize an economy because
A) central planners do not respond predictably to incentives. B) central planners cannot possibly obtain all the information necessary to allocate resources efficiently. C) most central planners are less intelligent than business entrepreneurs in market economies. D) central planners have inadequate funding to meet the needs of their constituents.