For this question, assume that the aggregate production function is represented by Y = AN. Which of the following represents the price setting relation for this economy?
A) (1 + m)A
B) (1 + m)A/W
C) (1 + m)W
D) W/A
E) none of the above
E
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The multiplier effect
A) explains what causes an expansion. B) has no impact on equilibrium expenditure. C) reinforces the negative effects of any reduction in spending. D) explains what causes a recession. E) explains how the economy recovers from a recession.
Jim is haggling with a car dealer over the sale price of a used car. Which of the following would determine the amount of surplus Jim extracts from the purchase?
a. Total difference between the buyer's and seller's valuations of the car b. The number of customers trying to buy that particular car c. The number of sellers trying to make Jim a sale d. All of the above
Suppose a company increases production from a point where marginal cost equals average total cost to a point where marginal revenue and marginal cost are equal. Is it a good idea for the company to do this? Why? a. No; average total costs have increased which means the company is not minimizing losses
b. Yes; because average variable costs are always less than average total costs. c. No; because the marginal cost of producing the last unit is the same as the marginal revenue. d. Yes; even though the previous level of output had minimized the average total cost, there was still profit to be earned by producing additional units. e. No; the previous level of output was the most efficient because it had the lowest average total cost.
In the United States, spending on residential construction
A) rose rapidly in the period just before the recession of 2007-2009, declined dramatically during the recession, and recovered rapidly thereafter. B) rose rapidly in the period just before the recession of 2007-2009, declined dramatically during the recession, and recovered only slowly thereafter. C) rose rapidly in the period just before the recession of 2007-2009, declined dramatically during the recession, and continued to decline slowly thereafter. D) rose slowly in the period just before the recession of 2007-2009, declined slowly during the recession, and recovered slowly thereafter.