Sarah gets a salary increase of 20 percent. Before her raise, she purchased 5 pounds of hamburger and 1 pound of beef stew a month. After her raise, she consumes 2 pounds of hamburger and 3 pounds of beef stew a month. If everything else is held constant, we know that
A) hamburger is an inferior good and beef stew is a normal good for Sarah.
B) hamburger is a normal good and beef stew is an inferior good for Sarah.
C) both hamburger and beef stew are normal goods for Sarah.
D) both hamburger and beef stew are inferior goods for Sarah.
Answer: A) hamburger is an inferior good and beef stew is a normal good for Sarah.
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What is a major reason international trade is restricted?
A) rent seeking B) to allow competition with cheap foreign labor C) to save jobs D) to prevent dumping E) to eliminate monopolies
When there is a negative entry for unilateral transfers in the balance of payments, it means that
A) there must be an offsetting positive sign in the capital account. B) U.S. residents gave more to foreign residents than foreign residents gave to U.S. residents. C) U.S. residents purchased less services from foreign countries than foreign countries purchased from U.S. residents. D) U.S. residents purchased more services from foreign countries than foreign countries purchased from U.S. residents.
Economists believe that oligopolists like American Airlines and the Kellogg Company:
a. make price and output decisions without regard to what their competitors might do b. have no perceptible influence on the market price, but choose output where marginal revenue equals the marginal cost of production. c. carefully watch and anticipate the moves of their competitors. d. have no control over market but produce output to the point where demand equal marginal cost.
Figure 11.4Figure 11.4 depicts demand and costs for a monopolistically competitive firm. If the firm's demand curve shifts to the left as more firms enter the market:
A. the firm's average cost will be lower at the new profit maximizing output level. B. the firm's marginal cost will be higher at the new profit maximizing output level. C. the firm's marginal revenue will remain the same at the mew profit maximizing output level. D. the firm's marginal cost will remain the same at the new profit maximizing output level.