Economists call a severe prolonged economic recession a:
a. slump.
b. depression.
c. stagnation.
d. stagflation.
e. trend.
b
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When Federal Reserve Banks add to their holdings of government securities,
A) commercial banks must reduce their net lending. B) commercial bank reserves increase. C) the Fed is extending less credit to the economy. D) the stock of money declines.
If the price elasticity of demand is 4 and the price of migraine medicine increases by 6%, what will be the percentage change in quantity demanded?
a. 6% b. 4% c. 24% d. 67%
Refer to the following graph. The price of capital (r) is $20.
Why wouldn't the firm choose to produce 5,000 units of output with the combination at B?
A. At B, MRTS < 3/2.
B. At B, MPK / r >MPL / w.
C. At B, MPL
Compared to the purely competitive industry, a pure monopoly:
A. Is able to use barriers to entry and maintain positive economic profits in the long run B. Produces an equal amount of output, but charges higher prices to cover all costs in the market C. Is often more efficient from society's perspective because it has big plants and it uses the newest technology D. Will always become competitive in the long run because positive economic profits will induce competitors into the market