At which point is society producing the most output possible with the available resources and technology? (See Figure 1.1.)
A. A.
B. B.
C. C.
D. D.
Answer: B
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A firm's demand for labor increases and its demand curve for labor shifts rightward if
A) the wage rate falls. B) the price of its product falls. C) its value of marginal product decreases. D) an advance in technology increases the marginal product of labor.
External economies of scale often arise because similar firms
A) locate in the same geographic region. B) collude to fix prices and increase profits. C) have excellent internal logistics. D) agree to cooperate to expand global trade. E) have economies of scale in production.
For a corporation, an important advantage of selling stocks instead of bonds is that:
a. in the case of a bond, the corporation has to pay a fixed rate of interest, while in the case of a stock, the corporation is not liable to pay any interest. b. in the case of a bond, the corporation has to pay a fixed rate of interest, while in the case of a stock, the corporation earns a fixed rate of interest. c. a bond can generate funds for the corporation only once, while a stock generates funds for the corporation each time it is resold. d. it is difficult to sell a bond because people perceive that a bond is risky, while it is easier to sell a stock because people perceive that it is safe to invest in stock.
The two words economists use most often are
a. inflation and trade. b. supply and demand. c. competition and prices. d. markets and equilibrium.