The basic truth that underlies the study of economics is the fact that we all face:
A. Death
B. Taxes
C. Risk
D. Scarcity
Answer: D
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
A guarded barbed wire fence separates East and West Bovinia. Soccer players are paid twice as much in West Bovinia as in East Bovinia. This is an example of
a. inelastic supply b. a temporary resource price differential c. a permanent resource price differential d. diminishing marginal revenue product e. economic rent
Which of the following is NOT a reason people save?
A. To reach consumption bundles in the future that would otherwise be unattainable B. To protect against unforeseen expenses C. To maximize their current consumption D. To earn additional money on unused income
The profit-maximizing condition for a perfectly competitive firm is:
A. P = MC. B. MR = AVC. C. MR = P. D. P = AVC.