A factor-price effect occurs when increases in the industry's output
a. attract new firms to the industry.
b. raise the cost of a variable input.
c. cause new subindustries to be developed.
d. result in lower prices for consumers.
b. raise the cost of a variable input.
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Which of the following is NOT an argument against using monetary policy to prick asset-price bubbles?
A) The effect of increasing interest rates on asset prices is uncertain. B) A bubble may only exist in some asset-prices and monetary policy will affect all asset prices. C) Using monetary policy to prick an asset-price bubble may have adverse effect on the aggregate economy. D) Even though credit-drive bubbles are easier to identify, they are still relatively hard to identify.
Which of the following is correct?
A. The effect of a compensated price change equals the effect of an uncompensated price change plus the effect of providing compensation. B. The effect of a compensated price change equals the effect of an uncompensated price change plus the effect of removing compensation. C. The effect of an uncompensated price change equals the effect of an uncompensated price change plus the effect of providing compensation. D. The effect of a compensated price change equals the substitution effect of the price change plus the income effect of the price change.
Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect
A. the quantity of good Y demanded to increase and the demand for good X to increase also. B. an increase in the demand for good X and a decrease in the quantity of good Y demanded. C. an increase in the demand for both good X and good Y. D. an increase in the quantity demanded of good Y and a decrease in the demand for good X.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point A necessarily represents
A. only hybrid cars being produced. B. an unattainable production point. C. what society wants. D. the economy's optimal production point.