The AS/AD model looks similar to the microeconomic supply and demand model
A. but is not based on it.
B. and is based on the microeconomic supply and demand model because the AS/AD is a macro representation of the micro model.
C. and is based on the microeconomic supply and demand model because both are based on opportunity costs.
D. and is based on the microeconomic supply and demand model because both are based on the principle of substitution.
Answer: A
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Hotspur Incorporated, a manufacturer of microwaves, is a price taker in both the input and output markets. To maximize its profit, Hotspur will hire labor up to the point where
A) the marginal revenue product of labor equals the wage rate. B) the marginal revenue product of labor equals the output price. C) the marginal product of labor is no longer positive. D) all economies of scale have been exhausted.
Which of the following is not true about moral hazard?
A. It increases the difficulty of operating private insurance markets. B. It increases the difficulty of operating public insurance markets. C. It is the tendency of people to change behavior when insured. D. It is the tendency of people with higher risks to buy more insurance.
If a country is producing at point where an increase in the production of one good requires a reduction in the production of another good, then it must be producing at an:
A. undesirable point. B. inefficient point. C. efficient point. D. unattainable point.
If the multiplier is 5, the MPC is
A. 0.1 B. 0.5 C. 0.2 D. 0.8