In the Solow model, if saving per worker initially exceeds investment per worker,
A) the economy will experience inflation.
B) the capital—labor ratio will increase.
C) investment per worker will decline.
D) saving per worker will decline.
B
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Use consumer indifference curves and budget lines to illustrate the effects of an increase in income for a normal good and an inferior good (use two graphs). Be sure your diagrams are fully and correctly labeled.
What will be an ideal response?
Exhibit 9-1 A monopolistic competitive firm
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As represented in Exhibit 9-1, the maximum long-run economic profit earned by this monopolistic competitive firm is:
A. zero. B. $200 per day. C. $1,000 per day. D. $20,000 per day.
Microeconomics is best described as the study of
A. inflation, unemployment, gross national product, and the nation's economy as a whole. B. the choices made by individual households, firms, and governments. C. marginal changes in the economy. D. how markets interact in the aggregate economy.
Markets tend to overallocate resources to the production of a good when
A) there are negative externalities. B) there are positive externalities. C) there are public goods produced. D) equilibrium occurs.