If a 10% increase in the price of one good, A, results in an increase of 5% in the quantity demanded of another good, B, then it can be concluded that A and B are
A. complementary goods.
B. substitute goods.
C. secondary goods.
D. independent goods.
Answer: B
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Figure 9-1 shows the marginal cost and average total cost curves for a perfectly competitive firm. If the market price is $10, and the firm produces more than 200
a.
the firm earns less profit per unit than if it produced 200 but more total profit.
b.
the firm earns more profit per unit than if it produced 200 and more total profit.
c.
the firm earns less profit per unit than if it produced 200 and less total profit.
d.
the firm earns more profit per unit than if it produced 200 but may make a loss.
e.
the firm will instantly go from making a profit to making a loss
What happened to the measure of money, M0, which includes only cash, bank reserves, and deposits at the Federal Reserve during the crisis?
a. It shrank measurably. b. It expanded slightly. c. It more than doubled. d. There was no change in MO.
Which of the following is NOT a government response to asymmetric information?
A. manufacturer's warranties B. liability laws C. social regulation D. government licensing
Answer the following questions true (T) or false (F)
1. The payment received by suppliers of entrepreneurial skills is called wages. 2. In the circular flow model, households demand resources such as labor services in the factor market. 3. In economics, the term "free market" refers to a market where products are traded but not sold.