A firm that produces a good with many substitutes will most likely find that:
A. lowering its price will increase total revenue.
B. raising its price will increase total revenue.
C. lowering its price will decrease total revenue.
D. lowering its price will not affect total revenue.
Answer: A
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The concavity or bowed-out shape of the production possibilities frontier is the result of
A. the law of downward-sloping demand. B. the law of upward-sloping demand. C. the principle of increasing cost. D. complementarity in consumption.
The concept of "the invisible hand" suggests that
A) products are produced out of a seller's sense of charity. B) when the seller is better off, the buyer is worse off. C) sellers exploit consumers with high prices. D) buyers and sellers are self-interested. E) the command system is the only way of efficiently allocating resources.
Which of the following are NOT included among Gordon's criticisms of Friedman's fooling model?
A) Workers buy many goods on a weekly basis and thus could discover quite quickly that prices had risen. B) Workers could discover movements in the aggregate price level fairly easily. C) The model relied on a non-market-clearing explanation of the labor market. D) Workers would predict higher prices if policies that led to higher prices in the past were used again.
For a borrower, an increase in the real interest rate
A) definitely reduces current consumption and increases future consumption. B) reduces current consumption and has an uncertain effect on future consumption. C) has an uncertain effect on current consumption and increases future consumption. D) has an uncertain effect on both current and future consumption.