In the simple circular-flow diagram, with households and firms, GDP can be computed
a. as the total payments for factors of production made by households
b. as the total expenditures by households on goods but not services, since services are intangible.
c. as the total expenditures by households on goods and services.
d. as the total expenditures by households on goods and services, less taxes paid.
c
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If a person is entertained by gambling, then
A) she is not risk averse. B) she does not understand the concept of a fair game. C) she may gamble even if it is an unfair game. D) she will definitely not buy automobile insurance.
In the short run, which of the following is likely to be a variable cost to a physician?
a. office space b. computers c. liability insurance d. insurance forms e. examining table
Scarcity limits the volume of goods that an economic system can produce but does not limit the production of services.
Answer the following statement true (T) or false (F)
The French economist Jean-Baptiste Say transformed the equality of total output and total spending into a law that can be expressed as follows:
A. Unemployment is not possible in the short run. B. Demand and supply are never equal. C. Supply creates its own demand. D. Demand creates its own supply.