How do firms and households interact in markets?
What will be an ideal response?
Firms supply goods and services to households, and buy factors of production from households. Households supply factors of production to firms, and buy goods and services from firms.
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When Joshua's income increases, he purchases more prime-rib dinners than he did before his income increased. For Joshua, prime-rib dinners are a(n)
a. normal good. b. inferior good. c. optimal good. d. Giffen good.
Economic stagnation coupled with high inflation is commonly called:
A. stagflation. B. inflationary stagnation. C. stagnatory growth. D. inflagnation.
Expenditures on U.S. produced steaks, shoes, and doctor visits are most likely classified as
A) net imports of goods and services. B) investment. C) government expenditure on goods and services. D) net exports of goods and services. E) consumption expenditure.
If using the same resources, the U.S. workers can produce more of any good than Mexican workers, then the United States should produce every good
a. True b. False Indicate whether the statement is true or false