If the cross elasticity of demand between goods A and B is negative
A) the demands for A and B are both price elastic.
B) the demands for A and B are both price inelastic.
C) A and B are complements.
D) A and B are substitutes.
Ques. 2In a prisoners' dilemma game, which of the following strategies gives the best outcome for both prisoners?
A) Both deny (collusion).
B) Both confess (not collude).
C) One confesses while the other denies.
D) none of the above
Ques. 3Using the data in the above table, if the private sector runs a surplus of 250 billion, imports will equal 1,000 billion if
A) government expenditure equals -750 billion.
B) investment equals -1000 billion.
C) government expenditure equals -1000 billion.
D) the government sector runs a deficit of 750 billion.
Ques. 4In the short run, which of the following actions lower the interest rate?
A) a decrease in the demand for money
B) an increase in the demand for money
C) a decrease in the quantity of money
D) a decrease in bond prices
Ques. 5A cost that arises from the production of a good that is paid by someone who did not participate in the production is called
A) a free rider.
B) an externality.
C) rent seeking.
D) a public failure.
Ques. 6If the market price of a perfectly competitive firm's product is below its average variable cost, then the firm's
A) marginal revenue is zero.
B) total revenue is as large as possible.
C) total revenue if it stayed open would be less than its total variable costs.
D) total revenue if it stayed open is less than its total cost but greater than its total fixed costs.
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