Which of the following best describes the substitution effect caused by a price increase?
a. A change in consumption due to the fact that you will not buy goods whose marginal value is below the new price.
b. A change in consumption due to the fact that you cannot afford your original market basket.
c. A smaller percentage change in quantity than in price.
d. A larger percentage change in quantity than in price.
a. A change in consumption due to the fact that you will not buy goods whose marginal value is below the new price.
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Select the phrase that correctly completes the following statement. "A decrease in the number of manufacturers caused a decrease in the supply of sailboats. As a result
A) the price of sailboats increased and the quantity of sailboats demanded decreased." B) the equilibrium quantity of sailboats increased." C) the price of sailboats increased and the demand for sailboats decreased." D) the price of sailboats increased. The higher price caused the supply of sailboats to increase."
Additions to inventory are
A) not counted as an expenditure in GDP accounting. B) counted as an intermediate input. C) counted as a component of investment spending. D) subtracted from sales revenue in calculating profit income.
Answer the following statements true (T) or false (F)
1. There is a correlation between the level of economic development of a nation and the status of its balance of trade. 2. The balance of payments is more like an income statement than a balance sheet. 3. If a U.S. farmer ships grain to Italy, this constitutes a debit transaction in Italy’s balance of payments. 4. Overseas investments by U.S. citizens are recorded as credit items in the financial account of the U.S. balance of payments. 5. Since unilateral transfers do not involve trading of goods or services, they are not included in the current account.
At an output of zero, ________ is zero.
A. total cost B. total variable cost C. total fixed cost D. All of the above are correct.