The Leontief production function:
A. is Q = max{bK, cL}.
B. is Q = aK + bL.
C. implies inputs are used in fixed proportions.
D. implies inputs are used in variable proportions.
Answer: C
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The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A
Classical economists think that lump-sum tax changes
A) should be used to smooth business cycles. B) have a powerful effect on the economy. C) affect aggregate demand after a lag. D) have no effect because of Ricardian equivalence.
Axis Group has a publishing house, operates in the sports gear market, and owns a coffee plantation. A board of directors is responsible for the overall performance of the group. Fabrics Inc, on the other hand specializes in women's apparel. Which of the following statements will be true?
a. Decision-making at Axis will be more decentralized in comparison to Fabrics, Inc. b. Many decisions at Fabrics is likely to be made at lower levels. c. Individuals at higher levels at Fabrics are less likely to have all of the knowledge that exists at lower levels. d. Information transfer within Axis Group will be easier as compared to Fabrics, Inc.
Refer to the information provided in Figure 5.3 below to answer the question(s) that follow.
Figure 5.3Refer to Figure 5.3. Use the midpoint formula. If the price of a gardenburger decreases from $8 to $7, the price elasticity of demand equals ________ and demand is ________.
A. -2.29; inelastic B. -2.14; elastic C. -0.47; inelastic D. -3.5; elastic