When demand increases, the equilibrium price ________ and the equilibrium quantity ________.
A) rises; decreases
B) falls; decreases
C) rises; increases
D) falls; increases
Ques. 2If net exports is a negative number, the government sector must ________ if the private sector is in a ________.
A) run a surplus; surplus
B) equal zero; deficit
C) run a deficit; surplus
D) The statement errs because the accounts are not related.
Ques. 3Sally derives utility from consuming apples and tacos as shown in the table above. Apples cost 1 each and tacos cost 2 each. If Sally's income is 9, she will consume
A) 5 apples and 2 tacos.
B) 3 apples and 3 tacos.
C) 1 apple and 4 tacos.
D) no apples and 4 1/2 tacos.
Ques. 4The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum
A) average total cost.
B) average marginal cost.
C) average variable cost.
D) wage rate.
Ques. 5By making most of its employees owners of the company, United Airlines attempted to
A) cope with the unlimited liability problem.
B) change its business organization from a corporation to a partnership.
C) address the principal-agent problem between the workers and managers.
D) increase the role of the command system in managing the firm.
Ques. 6Hiring foreign labor and producing in other countries is an example of offshoring.
Indicate whether the statement is true or false
Ques. 7Suppose a scientific breakthrough made free solar power available in unlimited quantities in the United States. The effect of this invention would be to move the
A) United States beyond its production possibilities frontier.
B) United States inside its production possibilities frontier.
C) U.S. production possibilities frontier outward.
D) U.S. production possibilities frontier inward.
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