The supply curve will be more inelastic when:
A. inputs to production are scarce.
B. firms' response to a price change is limited by the limited capacity of their production facilities.
C. a good has many substitutes.
D. the firm is experiencing diminishing returns to a variable input.
Answer: B
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Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.
If the economy falls into a recession, automatic stabilizers will cause:
A. tax receipts to fall and government spending to rise. B. both tax receipts and government spending to fall. C. tax receipts to rise and government spending to fall. D. both tax receipts and government spending to rise.
Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He asks his friend, Carmen, if she'd like to join him in setting up a partnership to start the business. What is one disadvantage in joining the partnership that Carmen should
consider? A) Carmen should realize that profits in the partnership will be reduced by dividend payments to shareholders. B) Carmen should realize that, as an owner of the business, she will be personally responsible for the debts of the business. C) Carmen should realize that the profits of the business will also be taxed as dividend income, so she faces the potential for double taxation of that business income. D) Carmen should realize that the Jeremy will have complete control over the business because it was his idea.
In a mixed open economy, the equilibrium GDP exists where:
A. C a + I g + X n intersects the 45-degree line. B. C a + I g = S a + T + X. C. C a + I g + X n + G = GDP. D. C a + I g + X n = S a + T.