Suppose that Pedro buys a mountain bike for $200, for which he was willing to pay up to $300 . What is Pedro's consumer surplus in this transaction?
a. $100
b. $200
c. $300
d. $500
a
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Suppose the nominal interest rate is 4% and the rate of inflation is 3%. The real interest rate is therefore
A) 7%. B) 1%. C) 0%. D) -1%. E) none of the above.
In a market economy, who makes the decisions that guide most economic activity?
a. firms only b. households only c. firms and households d. government
If a firm in a monopolistically competitive market has a demand curve shifting to the right, it could be that:
A. the selling price is less than the average total cost of the firm. B. firms are leaving the market. C. negative economic profits are being earned. D. All of these statements are true.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A. increases B. remains constant. C. initially increases, then decreases. D. decreases.