Describe the circular flow of the economy by discussing the two markets where households and firms meet
What will be an ideal response?
Firms and households meet in two markets: the goods market and the factors market. In the goods markets, households buy the goods and services that firms sell. In this market, households give firms money in exchange for the goods and services. In the factors market, households sell the services of the factors of production to firms, which buy the services of these factors. In the factors market, firms pay households money in exchange for the productive resources. Hence households earn their incomes in the factors market and spend their incomes in the goods market. And firms earn their revenue in the goods market and pay their costs in the factors market.
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A TV actor used to be a teacher. Aside from the salary, he likes both jobs equally well. If he can earn $50,000 as a teacher and $300,000 as an actor, what are his economic rent and opportunity costs as an actor?
a. Economic rent is $250,000 . opportunity costs are $50,000. b. Economic rent is $50,000 . opportunity costs are $250,000. c. Economic rent is $50,000 . opportunity costs are $300,000. d. Economic rent is $300,000 . opportunity costs are $50,000. e. Economic rent is $300,000 . opportunity costs are $350,000.
A perfectly competitive firm's total revenue curve
a. is a horizontal line b. is a vertical line c. is constant d. has a negative slope e. has a constant positive slope
The vertical intercept of the consumption function that represents the portion of consumption expenditure not associated with a level of disposable income is known as:
A. zero income intercept. B. disposable income intercept. C. autonomous consumption. D. automatic consumption line.
At an output level of zero, total cost is zero.
Answer the following statement true (T) or false (F)