The aggregate demand for good X is Q = 20 - P. If the price rises from P = $4 to P = $5, what is the change in consumer surplus?
A) $4.50
B) $5.50
C) $15.50
D) $16
C
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If aggregate expenditure in an economy equals 1,000 + 0.9Y and full employment real GDP equals 9,000, then this economy has
A. an inflationary gap. B. no output gap. C. a recessionary gap. D. no autonomous expenditure.
How are the following events likely to affect the market supply of rice in an economy?
a) A fall in the wage rate of farm labor b) An increase in the productivity of farm capital due to better technology c) An increase in the use of agricultural land for non-agricultural purposes
After a number of acquisitions, Air American controls 75 percent of the U.S. market. It has been charged with “monopolizing” the U.S. air markets by the Justice Department. In its defense, the airline would want to introduce evidence that
A. cross elasticities for air and rail travel were very high. B. income elasticities for air and rail travel were very high. C. price elasticity for air, rail, and auto travel were negative. D. management always considered the public interest when setting prices.
A firm is generally more interested in marginal profits than in total profits.
Answer the following statement true (T) or false (F)