Which of the following is the best measure of the effects of a recession?
A. Cross-price elasticity of demand.
B. Utility-maximizing rule.
C. Income elasticity of demand.
D. Price elasticity of demand.
Answer: C
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How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?
A) In the economy represented by a straight-line production possibilities curve, there is no opportunity cost. B) In the economy represented by a straight-line production possibilities curve, neither good is scarce. C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. D) In the economy represented by a straight-line production possibilities curve, changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced.
External benefits cause the market to:
a. underallocate resources. b. be more efficient. c. set excessively high prices. d. have persistent shortages.
The long-run average total cost curve:
A. indicates the lowest unit costs achievable when a firm has had sufficient time to alter plant size. B. has a shape that is the inverse of the law of diminishing returns. C. displays declining unit costs so long as output is increasing. D. can be derived by summing horizontally the average total cost curves of all firms in an industry.
An improvement in a firm's technology that improves productivity results in a(n):
a. leftward shift of the supply curve. b. upward movement along the supply curve. c. willingness to supply a larger quantity than before at any given price. d. downward movement along the supply curve.