Ceteris paribus, a 10 percent increase in income results in a 50 percent decline in the quantity of potatoes purchased. This implies potatoes can be categorized as _____.
a. complements
b. substitutes
c. inferior goods
d. normal goods
e. luxury goods
QUESTION 2Economists and accountants both think of profits as total revenue minus total cost, but what they include in costs may differ.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3Outsourcing refers to the process in which:
a. a firm purchases service from another firm in another country.
b. a firm hires laborers from a foreign market.
c. the government of a country works toward providing social security and other rights to migrant workers.
d. a firm purchases service from another firm.
e. workers of a particular country seek employment in a firm of a foreign country.
QUESTION 4Income elasticity of demand is expected to be _____.
a. relatively high for necessities
b. positive for most products
c. relatively low for luxuries
d. negative for most products
e. zero for most products
QUESTION 5Ray Tucker has run his company, Tucker's Towing and Wrecking, for two years and has made an accounting profit of 34,000 each year. As long as Tucker's Towing continues to make accounting profits, it is rational for it to remain in the towing business.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6Why are a large number of IT jobs being outsourced to China and India?
a. India and China experience large balance of payment deficits.
b. India and China are highly capital intensive economies.
c. India and China have abundant supply of cheap skilled labor.
d. India and China offers the best working conditions for the employees.
e. India and China experiences balance of payment surpluses.
QUESTION 7An inferior good or service is any good or service for which:
a. an increase in price causes an increase in the quantity demanded.
b. a decrease in price causes an increase in demand.
c. an increase in price causes a decrease in the quantity demanded.
d. an increase in the amount consumed causes a decrease in marginal utility.
e. an increase in income causes a decrease in demand.
QUESTION 8If someone you know offers far more to hire you to work for than you could ever have imagine, the opportunity cost of working for yourself would rise.
a. True
b. False
Indicate whether the statement is true or false
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