The circular flow model shows that goods and services flow from
A) businesses to households.
B) households to business.
C) the factor market to businesses.
D) the goods market to businesses.
E) the factor markets to the goods markets.
A
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When the price of a good changes, the substitution effect can be found by comparing the equilibrium quantities purchased
A) on the old budget line and the new budget line. B) on the original indifference curve when faced with the original prices and when faced with the new prices. C) on the new budget line and a hypothetical budget line that is a shift back to the original indifference curve parallel to the new budget line. D) on the new indifference curve.
The state of choosing not to acquire information because the costs of acquiring the information are greater than the benefits is referred to as
A) logrolling. B) rational ignorance. C) market failure. D) government failure.
Which of the following will NOT lead to an increase in demand for a normal good?
A. an increase in income B. a decrease in the price of a complement good C. an increase in the number of consumers D. an increase in the price of an input
You use $45,000 of your own money to start an espresso stand. During the first year you earn a 10% return on that investment. If the current interest rate is 8%, you earn an economic profit of
A. -$900. B. $100. C. $500. D. $900.