In Figure 4.1, the demand curve that is perfectly elastic is on graph:
A. A.
B. B.
C. C.
D. D.
Answer: B
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Monopolistic competition is similar to perfect competition in that:
a. there are only a few firms in the market. b. the entry into and exit from the market is easy. c. there are significant barriers to entry in the market. d. each firm sells a homogeneous product. e. each firm differentiates its product through advertising.
The process of making investments toward fixed assets, both tangible and intangible, is known as
a. capital budgeting b. capital spending c. capital d. net spending e. none of these
If purchasing-power parity holds, then the value of the
a. real exchange rate is equal to one. b. nominal exchange rate is equal to one. c. real exchange rate is equal to the nominal exchange rate. d. real exchange rate is equal to the difference in inflation rates between the two countries.
A budget constraint shows
A. all of the possible combinations of goods that can be purchased with a specific budget. B. all of the combinations of sets of goods that yield the same level of satisfaction. C. all of the goods the consumer gets positive marginal utility from when the goods are consumed. D. all of the goods that a consumer substitutes for other goods when prices fall.