Economists use models to:
a. abstract from the complexities of the world.
b. understand economic behavior.
c. explain and help predict human behavior.
d. do all of these.
d
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Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.
A. An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. B. Due to process innovations in computer chip manufacturing, the market supply of computers increased. C. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. D. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.
If a government imposed price ceiling legally sets the price of beef below market equilibrium, which of the following will most likely happen?
A. The quantity of beef demanded will decrease. B. The quantity of beef supplied will increase. C. There will be a surplus of beef. D. There will be a shortage of beef.
Figure 17.1 depicts a firm's marginal revenue product curve. Why does the marginal revenue product of labor decrease faster as the firm increases its use of labor by 10 hours?
A. Because the marginal product of labor decreases at an increasing rate. B. Because the marginal product of labor decreases at a decreasing rate. C. Because the marginal product of labor increases at an increasing rate. D. Because the marginal product of labor increases at a decreasing rate.
Terence has $50 per week to spend on Subway sandwiches and milkshakes. The price of a Subway sandwich is $5 and the price of a milkshake is $4. He buys 6 sandwiches and 5 milkshakes. The marginal utility of the 6th sandwich = 25 and the marginal utility
of the 5th milkshake = 24. Which of the following is true? A) He is not maximizing his utility and should buy more milkshakes. B) He is maximizing his utility. C) He is not maximizing his utility and should buy more Subway sandwiches. D) He is not maximizing his utility because he is not spending all of his income.