Category: Economics

Companies most likely have a well-defined supply function when the market structure is:
Group of answer choices
None of the answers is correct.
monopolistic competition
perfect competition
oligopoly

As an economy grows, its PPF
becomes less steep.
becomes straighter.
becomes steeper.
shifts outward.
does not shift; instead, the production point moves from inside the PPF to be closer to the PPF.

➤ Why are firms in a competitive market called price takers?
Firms are price takers because each one is too small to influence the market price. They accept the prevailing price and choose output where marginal cost equals that price. Any attempt to raise price loses all customers, while above-normal profits attract entry that pushes price back down.

A country that does not trade with other countries is known as
Capital Controls Economy or Closed Economy
Trade Deficit Economy or Closed Economy
Anarchy or Closed Economy
Autarky or Closed Economy

➤ Why does the existing debt stock matter more than current deficits?
The size and composition of the existing debt stock determine current interest costs. Interest outlays equal the outstanding principal multiplied by prevailing interest rates (roughly r × D). Current deficits affect future debt levels, but today’s payments reflect past borrowing, the debt’s maturity profile, and which securities must be rolled over or refinanced.

➤ How do you calculate consumer surplus at equilibrium?
Consumer surplus is the area between the demand curve and the market price, from zero to the equilibrium quantity. For linear demand use 0.5 × base × height, where base is Q* and height equals the choke price (demand intercept) minus the equilibrium price. It shows buyers’ net benefit.

Celebrities have images and cultural meanings that resonate with consumers. The dominant characteristics of the source should match the characteristics of the product in order to be successful.