A rational person:
A. makes choices based on added benefits and added costs.
B. considers the financial benefits and financial costs of making a choice.
C. undertakes activities until the net benefits become less than zero.
D. makes choices based on total benefits and total costs.
Answer: A
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Two economists from Ohio University estimated that the demand curve for kerosene in Indonesia was such that a 10 percent increase in the price reduced the quantity demanded by 2.2 percent and that a 10 percent increase in the price of electricity increased the demand for kerosene by 1.6 percent. This indicates that (i) the demand for kerosene is price inelastic and (ii) kerosene and electricity are substitutes. Which of these two statements is correct?
A. i and ii B. i not ii C. ii not i D. neither i nor ii
According to the textbook, what are the two key political functions of government in a market economy?
What will be an ideal response?
Which of the following statements is true?
A. Competitive firms will respond less to changes in output prices over the long run than they will over the short run because short-run marginal cost is lower than long-run marginal cost. B. Competitive firms will respond more to changes in output prices over the long run than they will over the short run because long-run marginal cost is lower than short-run marginal cost. C. Competitive firms will respond less to changes in output prices over the long run than they will over the short run because long-run marginal cost is lower than short-run marginal cost. D. Competitive firms will respond more to changes in output prices over the long run than they will over the short run because short-run marginal cost is lower than long-run marginal cost.
A demand-pull inflation can be described as ________ shifts in the AD curve and ________ shifts in the SAS curve.
What will be an ideal response?