Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2.
B. P2 and Y3.
C. P3 and Y1.
D. P2 and Y2.
Answer: B
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If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is
A) perfectly inelastic. B) relatively elastic. C) perfectly elastic. D) unit elastic.
One reason individuals are willing to pay for information in uncertain situations is that information
A) can reduce uncertainty. B) is a way to diversify. C) is a method of insurance. D) is a method of self-insurance. E) always reduces the difference between the probabilities of possible outcomes.
If a country is completely self-reliant in producing goods for its own consumption needs, then
A. It achieves a higher standard of living by exporting. B. It promotes specialization. C. It consumes more than it can with trade. D. Its consumption possibilities equal its production possibilities.
Which of the following is held constant when constructing a production possibilities curve?
A. the amount of total resources used B. combination of goods produced C. the price level D. all of these