The purpose of a production possibilities graph is to:
a) enable a country to mobilize to win a war
b) keep an economy from having nonproductive workers
c) show alternative ways to use an economy's resources
d) make it possible to increase an economy's output
Answer: c) show alternative ways to use an economy's resources
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Suppose sugar and artificial sweeteners are perfect substitutes for Sam. Her indifference curves for those two goods would be
A) downward-sloping and convex to the origin. B) downward-sloping and straight lines. C) L-shaped. D) downward-sloping and concave to the origin.
Those who favor passive policy making argue that all of the following exist EXCEPT
A) perfectly flexible wages and prices. B) the trade off between inflation and unemployment is not stable in the short run and is non-existent in the long run. C) pure competition is typical. D) aggregate demand shocks can influence real GDP and unemployment.
The sign of the cross-price elasticity tells us whether two commodities are complements or substitutes, but the size of this elasticity measure tells us
a. how the supply side of the market reacts to changes in demand b. whether the government should regulate the two markets c. which technology producers use d. how closely the two goods are related e. whether or not excess profits can be made in either market
The exit of firms from a market, ceteris paribus,
A. Reduces the economic losses of remaining firms in the market. B. Increases the equilibrium output in the market. C. Shifts the market demand curve to the left. D. Shifts the market supply curve to the right.