An increase in total revenue will result if
A) demand is inelastic and price increases.
B) demand is elastic and price increases.
C) demand is inelastic and price decreases.
D) demand is unitary elastic and price decreases.
Answer: A
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A usual assumption in real business cycle models is that the economy is populated by a group of identical individuals and the behavior of the group can then be explained in terms of the behavior of one individual, called a(n)
a. maximizing agent. b. representative agent. c. republican agent. d. informative agent. e. democratic agent
The idea of menu costs suggests that
a. firms alter prices less frequently as inflation increases. b. firms alter prices more frequently as inflation increases. c. firms always alter prices when costs increase. d. firms alter prices as interest rates rise.
Economists would consider a firm with ______ to be making a normal profit.
a. a zero economic profit b. a zero accounting profit c. an economic profit that exceeds its accounting profit d. equal accounting and economic profits
Which of the following statements concerning the relationships between total product (TP), average product (AP), and marginal product (MP) is not correct?
A. TP reaches a maximum when the MP of the variable input becomes zero. B. AP continues to rise so long as TP is rising. C. AP reaches a maximum before TP reaches a maximum. D. MP cuts AP at the maximum AP.