As the relative price of a good falls, the substitution effect implies that people buy
A) less of that good and more of its substitutes.
B) more of that good and less of its substitutes.
C) less of that good and less of its substitutes.
D) more of that good and more of its substitutes.
B
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The main sources of economies of scale are
A) increasing marginal cost and decreasing marginal product. B) specialization of resources such as labor and capital. C) caused by the difficulty of coordinating and controlling large enterprises. D) decreasing marginal cost and increasing marginal product. E) an increase in a firm's bargaining power to lower the wage rate and the cost of capital as the firm's output increases.
The law of diminishing returns applies to
A) the short run only. B) the long run only. C) both the short and the long run. D) neither the short nor the long run. E) all inputs, with no reference to the time period.
A monopoly's economic profits are represented by
a. [price minus marginal cost] times number of units sold. b. [price minus average cost] times number of units sold. c. [marginal revenue minus price] times number of units sold. d. [marginal cost minus price] times number of units sold.
The unemployment rate is equal to
a. the number unemployed divided by the labor force. b. the number unemployed divided by the population. c. the number unemployed divided by the number employed. d. the labor force divided by the population.