Assume the graph shown shows Bobbi's budget constraint. If hairbands cost $5, then Bobbi's income to spend on these two items must be:
A. $8.
B. $40.
C. $6.
D. Cannot be determined without more information.
Answer: B
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When an industry supply curve increases enough to erase economic profits,
a. weaker firms exit the industry b. quantity demanded decreases, but only slightly c. all firms in the industry incur economic losses d. entry of new firms and expansion of existing firms stop e. marginal revenue increases
One reason the government enacts fiscal policy instead of waiting for the economy to correct itself is the automatic adjustment:
A. will cause permanent inflation. B. means a lower level of potential GDP. C. can take a very long time. D. is generally not supported by government officials.
Jimbo has a comparative advantage over Ned in producing a good if:
A. Jimbo can produce more of the good than Ned can in a given time period. B. Jimbo has a lower opportunity cost of producing the good than does Ned. C. Jimbo has to trade off more than Ned does to produce the good. D. Jimbo has a higher opportunity cost of producing the good than does Ned.
Which of the following is a question answered with positive economic analysis?
A) If the college increased its eligibility requirements for enrollment, will class sizes decline? B) Should the college charge higher tuition for part-time students? C) Should the college eliminate its athletic program to cut its costs? D) Should the college reduce tuition for out-of-state residents?