Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: Name of CompanyRevenuesCost of Purchased inputsCitrus Growers Inc.$0.750Florida Jam Company$2.00$.75The Corner Store$2.50$2.00What is the value added of The Corner Store?
A. $2.50
B. $2.00
C. $1.75
D. $0.50
Answer: D
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If this year the price level is 135 and last year it was 125, the inflation rate is
A) 8 percent. B) 10 percent. C) 12 percent. D) none of the above.
A utilitarian government will pursue policies that redistribute income from the rich to the poor. One problem with these policies is that
a. everyone has less incentive to work hard. b. the rich will work harder while the poor will not. c. the poor will work harder while the rich will not. d. everyone in the middle class ends up worse off.
A budget deficit occurs if government spending:
A. Equals tax revenues. B. Is greater than tax revenues. C. Is less than tax revenues. D. Causes tax revenues to increase.
The graph above shows the average cost, marginal cost, demand, and marginal revenue curves for selling computers in a given market. The computer industry is currently perfectly competitive and in equilibrium. Suppose all firms in the industry are taken over by a single firm that establishes a monopoly in the market. Assuming the monopoly maximizes profit,
a. there will be no effect on the price of computers. b. the price of computers will increase from $400 to $600, and the quantity demanded will fall from 400 to 200 per day. c. the price of computers will be set equal to the marginal cost of computers. d. the price of computers will increase from $400 to $600, but there will be no change in quantity demanded.