If the actual price level exceeds the expected price level reflected in long-term contracts,
a. firms will find production more profitable than they had expected and will decrease the quantity of output supplied
b. firms will find production less profitable than they had expected and will decrease the quantity of output supplied
c. firms will find production less profitable than they had expected and will increase the quantity of output supplied
d. unemployment will decrease
D
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When producing goods and services along a PPF, tradeoffs exist because
A) not all production is efficient. B) society has only a limited amount of productive resources. C) buyers and sellers often must negotiate prices. D) human wants and needs are limited at a particular point in time.
Grant has $200 to spend each month on restaurant meals and jazz performances at his
neighborhood jazz club. The price of a typical restaurant meal is $20 and the price of a jazz performance ticket is $10. Grant is maximizing his utility by consuming 6 restaurant meals and attending 8 jazz performances. Suppose Grant still has $200 to spend, but the price of restaurant meal rises to $25, while the price of jazz performance ticket drops to $8. Can it be determined if Grant is better off or worse off than he was before the price change? Use a budget constraint/indifference curve graph to illustrate your answer.
In the context of stock markets, “the tail wags the dog” means that a failure of the stock market can drag down the entire economy.
Answer the following statement true (T) or false (F)
The decision by firms of how to produce output is based on
A. techniques of production available. B. the price of inputs. C. the price of output. D. government oversight.