What does new technology generally do to production?
(A) It lowers cost and decreases supply.
(B) It lowers cost and increases supply.
(C) It has very little effect on production.
(D) It increases cost and decreases supply.
Ans: (B) It lowers cost and increases supply.
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When demand is elastic, an increase in price will cause
a. an increase in total revenue. b. a decrease in total revenue. c. no change in total revenue but an increase in quantity demanded. d. no change in total revenue but a decrease in quantity demanded.
Suppose that inventories were $40 billion in 2007 and $50 billion in 2008. In 2008, accountants would:
a) add $10 billion to other elements of investment in calculating total investment. b) subtract $10 billion from other elements of investments in calculating total investment. c) add $45 billion (= $90/2) to other elements of investment in calculating total investment. d) subtract $45 billion (= $90/2) from other elements of investment in calculating total investment.
Why do nations often impose trade barriers that make it difficult for their own citizens to trade with people in another country?
A) Trade restrictions improve the efficiency of resource use. B) Trade restrictions are a good way for a country to increase the income levels of its citizens. C) Trade restrictions provide gains to domestic residents at the expense of foreigners. D) Trade restrictions often provide benefits to highly visible special interest groups while imposing a less visible cost on the general populace.
The price elasticity of supply is higher when
A) the number of buyers in the market decreases. B) the product in question is an inferior good. C) the number of buyers in the market increases. D) producers have more time to adjust to price changes.