A market allows interactions between consumers and firms The greater is the marginal productivity of labor relative to that of capital has an elasticity of -1.2 firm earn positive profits and new firms will enter

allows interactions between consumers and firms

The purpose of making assumptions in economic model building is to $50,000;$25,000 1400; B simplify the model while keeping important details Marginal rate of substitution is equal to - 1.73. Consumer more X less Y

simplify the model while keeping important details

If an important assumption is omitted from an economic model the model's predictions may be inaccurate the two goods are substitutes 1400; B he would give up 5 salads to get the next pizza

the model's predictions may be inaccurate

Which of the following is an example of a normative statement? A market Returns to scale = 1.47; increasing returns to scale $50,000;$25,000 To make the good available to more people, a lower price should be set

To make the good available to more people, a lower price should be set

Which of the following statements is true? local residents likely wouldn't go to the park at prices disneyland can charge for tourists, which would reduce disneylands profits Human resource managers design compensation systems to encourage employees to work hard then a 1% decrease in price leads to a rise in quantity of greater than 1% then it changes significantly in response to a price change

Human resource managers design compensation systems to encourage employees to work hard

Consumers have been buying fewer CDs as downloadable music has become easier to purchase and use. We would represent this as all of the above Society faces trade-offs because of the average total cost falls as production increases a leftward shift of the demand curve for CDs

a leftward shift of the demand curve for CDs

The demand curve for soda pop to shift to the left The implementation of the assembly line is an example how Recently many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect Which of the following is an example of a normative statement? If the utility function (U) between food (F) and clothing (C) can be represented as U = Sqaure root of F times C, marginal utility of food

Recently many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect

that individuals have different valuations of the same product One way to explain the convexity of isoquants is to say that A downward sloping demand curve indicates A small business owner earns $60,000 in revenue annually. The explicit annual costs equal $10,000. The owner could work for someone else and earn $25,000 annually. The owner's accounting profit is ________ and owner's economic profit is ________. In deciding whether to operate in the short run, the firm must consider the relationship between price and

A downward sloping demand curve indicates

The price of the product An isoquant represents levels of capital and labor that Consider the following production function: q= 100L^.8K^.4 Currently the wage rate (w) is $3.00 and the price of captial (r) is $1.00 If the firm is using units of capital in production, how much labor should be employed to minimize costs? You purchase a pizza oven that is expected to last 10 years for $15,000. How do you account for the economic cost of the oven? Which of the following would NOT change demand

Which of the following would NOT change demand

A high marginal propensity to consume implies which of the following? High average propensity to save Low marginal propensity to save Low average propensity to consume High marginal propensity to save

Low marginal propensity to save

Unlike a market economy, a command economy uses _____? Decentralized decision making Private ownership of resources More centralized planning in economic decision making Market-driven supply and demand

More centralized planning in economic decision making

The value of a country's currency will tend to appreciate if _____? The country's imports increase The country's inflation rate rises The country's interest rates decrease Demand for the country's exports increases

Demand for the country's exports increases

Which of the following best illustrates an improvement in a country's standard of living? A decrease in unemployment rate An increase in nominal GDP A decrease in inflation rate An increase in real GDP per capita

An increase in real GDP per capita

Hyperinflation is typically caused by _____? A sudden increase in consumer demand A rise in production costs Continuous expansion of the money supply to finance government budget deficits A decrease in the supply of goods

Continuous expansion of the money supply to finance government budget deficits

The official unemployment rate understates the unemployment level in the economy because it _____? Includes part-time workers as fully employed Excludes people over 65 Ignores underemployed and discouraged workers Counts students as unemployed

Ignores underemployed and discouraged workers

Which of the following combinations of changes in government spending and taxes is necessarily expansionary? Increase in government spending and decrease in taxes Decrease in government spending and increase in taxes Increase in both government spending and taxes Decrease in both government spending and taxes

Increase in government spending and decrease in taxes

For an economy consisting of businesses only, which of the following is consistent with the circular flow of income and production? Businesses are suppliers of goods and services and consumers of resources Foreign sector is the main consumer of goods Government is the main supplier of resources Households are suppliers of resources and consumers of goods and services

Households are suppliers of resources and consumers of goods and services

What are the 8 variables that can change Aggregate Demand (AD) in an economy? Interest Rates, Government Purchases, Taxes, Expected Future Income, Expected Future Profitability, Foreign Real GDP, Foreign Exchange Rate, Domestic Wealth Interest Rates, Government Purchases, Taxes, Expected Future Income, Expected Future Profitability, Foreign Real GDP, Foreign Exchange Rate, Household Wealth Interest Rates, Government Purchases, Taxes, Inflation Rate, Expected Future Profitability, Foreign Real GDP, Foreign Exchange Rate, Household Wealth Interest Rates, Government Purchases, Taxes, Expected Future Income, Expected Future Profitability, Domestic Real GDP, Foreign Exchange Rate, Household Wealth

Interest Rates, Government Purchases, Taxes, Expected Future Income, Expected Future Profitability, Foreign Real GDP, Foreign Exchange Rate, Household Wealth

The Long-Run Aggregate Supply (LRAS) curve is determined by which factors in the economy? Quantity of labor, inflation rate, government spending Quantity of labor, quantity of capital, technological advances Quantity of capital, interest rates, foreign exchange rate Technological advances, taxes, household wealth

Quantity of labor, quantity of capital, technological advances

What are the 5 factors that can shift the Short-Run Aggregate Supply (SRAS) curve? Quantity of Labor, Quantity of Capital, Government Spending, Expected Future Price Level, Price of Natural Resources Quantity of Labor, Quantity of Capital, Technological Advances, Taxes, Price of Natural Resources Quantity of Labor, Inflation Rate, Technological Advances, Expected Future Price Level, Price of Natural Resources Quantity of Labor, Quantity of Capital, Technological Advances, Expected Future Price Level, Price of Natural Resources

Quantity of Labor, Quantity of Capital, Technological Advances, Expected Future Price Level, Price of Natural Resources

The AS-AD Model seeks to explain which economic phenomena? Economic growth, taxes, and household wealth The business cycle, inflation, and some degree of economic growth The business cycle, unemployment, and government spending Inflation, interest rates, and foreign exchange rates

The business cycle, inflation, and some degree of economic growth

What indicators do we use to measure the performance of an economy? Consumer confidence, Retail sales, Housing starts Trade balance, Government debt, Foreign investment Gross Domestic Product (GDP), Price level/inflation, Unemployment Interest rates, Stock market indices, Exchange rates

Gross Domestic Product (GDP), Price level/inflation, Unemployment

What question does GDP answer regarding a country's productivity? How productive were we this year as a country? What is the total population of the country? What is the average income per capita? How much foreign investment did we receive?

How productive were we this year as a country?

Why do we look at total market value (in dollars) rather than just the raw number of products produced in a country? Because different goods and services have different values (prices), their dollar value is more indicative of the level of productivity it took to make those goods and services Because it shows the number of factories in operation Because it is easier to calculate Because it reflects the number of workers employed

Because different goods and services have different values (prices), their dollar value is more indicative of the level of productivity it took to make those goods and services