When an investment project generates output that is valued more highly than the value of the resources required for its production,
a. undertaking the project will create wealth.
b. it will generally be profitable to undertake the project if property rights are securely defined and enforced .
c. entrepreneurs seeking profit will have little incentive to undertake such projects.
d. both a and b are correct.
D
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The owner of a pizza shop observes that when she raises the price of a large pizza, her total revenue decreases, and when she lowers the price of a large pizza, her total revenue increases. This suggests that:
A. pizza lovers act irrationally. B. the demand for her large pizzas is inelastic with respect to price. C. the demand for her large pizzas is elastic with respect to price. D. there are few good substitutes for a large pizza.
By the end of 2011, the federal debt was about
A. $20 billion. B. $80.6 billion. C. $1 trillion. D. $10.1 trillion.
In a multi-product firm, cannibalization is
a. An increase in the quality of both the brand's products b. A decrease in the quality of both the brands products c. An increase in both the brand's sales d. An increase in one of the brand's sales due to the decrease in sales of the other.
An automatic stabilizer is a feature of the economy that
a. makes prices "sticky." b. reduces its sensitivity to shocks. c. maximizes its volatility. d. automatically reduces recessionary trends.