Question # 2 of 15
Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve, the profit maximization condition for the firm can be written as:

P = MR
P = MC

Question # 3 of 15
There are __________________methods of measuring GDP:


Question # 4 of 15
A graph showing all the combinations of capital and labour available for a given total cost is the:

Budget constraint.
Expenditure set.
isocost line.

Question # 5 of 15
Assume that steak and potatoes are complements. When the price of steak goes up, the demand curve for potatoes:

Shifts to the left.
Shifts to the right.
Remains constant.
Shifts to the right initially and then returns to its original position.

Question # 6 of 15
Average physical product is equal to:


Question # 7 of 15
If a firm pays cash to buy a building so as to have office space for its workers, the monthly opportunity cost of the building is best measured as:

The price the firm paid divided by twelve.
The rent the firm could earn if it rented the building to another firm.
The monthly mortgage payment the firm would have had to pay.

Question # 8 of 15
In a production process, all inputs are increased by 10%; and output increases equal to 10%. This means that the firm experiences:

Decreasing returns to scale.
Constant returns to scale.
Increasing returns to scale.
Negative returns to scale.

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Question # 9 of 15
When the marginal revenue product is greater than the marginal input cost of labor, the profit maximizing firm will:

Hire more
Hire less
Maintain the same employment
Decrease output

Question # 10 of 15
Other things equal, expected income can be used as a direct measure of well-being:

No matter what a person's preference to risk.
If and only if individuals are not risk-loving.
If and only if individuals are risk averse.
If and only if individuals are risk neutral.

Question # 11 of 15
Which of the following concepts apply to oligopoly more than to any other market structure?

Advertising and product differentiation
Easy entry and more than one firm in the market
Homogeneous product and perfect information
Concentration and interdependence

Question # 12 of 15
Consider two commodities X and Y. If the cross-elasticity of demand is positive, it means the goods are:


Question # 13 of 15
Gina's Hair Styling rents storage space in the basement from Gina's mom for $300 per month. Gina's mom is thinking of increasing the rent to $400 per month. As a result, Gina's marginal cost of styling hair will:

Decrease by $100.
Not change.
Increase by $100 divided the number of customers.
Increase by $100.

Question # 14 of 15
The production possibilities curve:

Shows all combinations of goods that society most desires
Indicates that any combination of goods lying outside the curve is attainable
Separates all combinations of two goods that can be produced from those that cannot
Shows only those combinations of two goods that reflect "full production"

Question # 15 of 15
AD curve slopes upward for both Keynes and classical