Economics Knowledge Quiz
Economics Knowledge Quiz
Test your understanding of fundamental economic concepts with our comprehensive quiz designed for students and enthusiasts alike. With 124 challenging questions, you will explore various topics related to economics, including microeconomics, macroeconomics, and economic theories.
- Assess your knowledge of economic principles.
- Engaging questions to enhance your learning.
- Perfect for students and anyone interested in economics.
1.______ means the study of how society manages its scarce resources
Economics
Economical
Finance
Economy
2. Government policies designed to promote efficiency
Tend to cause the economy to grow more slowly.
Usually do so at the expense of equality.
Usually don't work.
Tend to add a lot of bureaucracy to firms in the economy.
3. All of the following can be considered a student's costs of going to the university, EXCEPT:
Textbooks
The student's time, which can no longer be devoted to earning a salary.
Room and board (that cost her about the same as she was paying before entering college).
Tuition and fees.
4. The government enacted regulation requiring people to wear seatbelts in their cars. All of the following resulted from this regulation, EXCEPT:
The overall well-being of the two persons remains unchanged.
One person generally gains at the expense of the other.
Overall deaths due to car accidents changed very little in the country.
Less pedestrians were killed in car accidents.
5. When two individuals trade voluntarily:
One person generally gains at the expense of the other.
Both persons generally gain from the exchange.
One person always gains at the expense of the other.
6. In a market economy, the decisions of what and how much to produce are generally made by:
All producers and consumers.
Voters in elections.
Non-governmental agencies.
7. Whatever must be given up to obtain some items is called ________
Opportunity cost
Marginal cost
Marginal benefits
Total cost
8. A government that implements a policy designed to reduce inflation can expect unemployment to:
Decrease in the short run.
Increase in the short run.
Decrease in the long run.
Increase in the long run.
10. Which of the following is FALSE, regarding economics as a science?
Economists pay close attention to natural experiments resulting from historical events.
Economic theories represent unavoidable facts.
It is difficult to conduct experiments in economic matters.
Economic knowledge is obtained through the scientific method, just as in any other science.
11. Economists use assumptions in order to:
Make their theories more realistic
Simplify economic theories, so as to make it possible to answer economic questions
Consumption recreate real situations accurately, with all their complexity
12. Economic models are:
Usually composed of diagrams and equations.
Simplified versions of economic theories.
All of the other options are true.
14. In the circular-flow model of the economy:
The economy has only two sectors: firms and households.
Firms produce and provide factors of production.
Dollars in the economy are used over and over in an endless cycle.
13. All of the following are characteristics of the circular-flow model of the economy, EXCEPT:
The model describes two circular flows: one for inputs and one for outputs
The two flows described by the model move in opposite directions.
The model includes two sectors: firms and households.
15. Which of the following is true regarding the production possibilities frontier (PPF) for the economy?
Any point on the PPF represents an efficient level of production.
Any point inside the PPF represents a combination of production that is not feasible.
Increases in the resources available for production will cause the PPF to shift toward the origin.
16. Economic growth in the economy can be portrayed in the model of the production possibilities frontier as a:
Movement up and left along the PPF.
]shift of the PPF toward the origin.
Movement down and right along the PPF.
Shift of the PPF away from the origin.
If there is an increase in the price of apples which causes consumers to purchase fewer kilograms of apples and more kilograms of oranges, the CPI will suffer from
Substitution bias
Base year bias
Bias due to unmeasured quality change
Bias due to the introduction of new goods
Suppose your income rises from โฌ19,000 to โฌ31,000 while the CPI rises from 122 to 169. Your standard of living has likely
Risen
Fallen
Stayed the same
You can't tell without knowing the base year
17. Microeconomics is the study of:
How governments can reduce inflation.
How households and firms make decisions and how they interact in markets.
Economy-wide phenomena, including inflation, unemployment, and economic growth.
How governments can reduce inflation.
18. Which of the following is an example of a normative statement?
Over the past 50 years, the number of women who participate in the labor force has increased dramatically.
When the price of a good increases, consumers respond by reducing the quantity of that good they want to purchase.
The government should increase spending during recessions, so that the economy recovers quickly.
Over the past 50 years, the number of women who participate in the labor force has increased dramatically.
Which of the following statements is correct?
The real interest rate is the nominal interest rate minus the inflation rate.
The nominal interest rate is the inflation rate minus the real interest rate
The nominal interest rate is the real interest rate minus the inflation rate.
The real interest rate is the sum of the nominal interest rate and the inflation rate
19. Economists tend to disagree with each other because:
Different economists support different theories, so they believe different things are going on in the economy.
All the other options are true.
Different economists have different values and priorities in economic matters.
Different economists have different values and priorities in economic matters.
If workers and firms agree on an increase in wages based on their expectations of inflation and inflation turns out to be more than they expected,
Firms will gain at the expense of workers.
Workers will gain at the expense of firms
Neither workers nor firms will gain because the increase in wages is fixed in the labour agreement
None of these answers
A reasonable measure of the standard of living in a country is.
Real GDP per person
Nominal GDP per person
Real GDP
The growth rate of nominal GDP per person
20. Points on the production possibilities frontier are
Inefficient
Normative
None of these answers
Efficient
50. If a price floor is in place and it is not binding, the market will:
Remain in equilibrium, unaffected by the price floor
Experience a shortage
Experience a surplus
Adjust the equilibrium price until it is equal to the price floor
21. Economic growth is depicted by
A movement along a production possibilities frontier toward capital goods
A shift in the production possibilities frontier inward
A shift in the production possibilities frontier outward
The curve
When a nation has very little GDP per person,
It has the potential to grow relatively quickly due to the "catch-up-effect."
It is doomed to being relatively poor forever.
None of these answers
An increase in capital will likely have little impact on output
It must be a small nation
22. Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade,
The opportunity cost of 1 watch is 3 rings
11
Once a country is wealthy
None of these answers
It no longer needs any human capital
Capital becomes more productive due to the "catch-up effect"
It may be harder for it to grow quickly because of the diminishing returns to capital
It is nearly impossible for it to become relatively poorer
Our standard of living is most closely related to
How hard we work
Our productivity, because our income is equal to what we produce
Our supply of capital, because everything of value is produced by machinery
Our supply of natural resources, because they limit production
23. Suppose the world consists of two countries: Kazakhstan and Kyrgyzstan. Further, suppose there are only two goods--food and clothing. Which of the following statements is true?
If Kazakhstan has a comparative advantage in the production of food, then Kyrgyzstan must have a comparative advantage in the production of clothing.
If Kazakhstan has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing.
If Kazakhstan has a comparative advantage in the production of food, Kyrgyzstan might also have a comparative advantage in the production of food.
None of these answers.
24. Tim is a tax accountant. He receives $100 per hour doing tax returns. He can type 10,000 characters per hour into spreadsheets. He can hire an assistant who types 2,500 characters per hour into spreadsheets. Which of the following statements is true?
Tim should hire the assistant as long as he pays the assistant less than $25 per hour.
None of this
Tim should hire the assistant as long as he pays the assistant less than $100 per hour.
Tim should hire the assistant as long as he pays the assistant less than $50 per hour.
Which of the following is an example of equity finance?
Corporate finance
Company shares
Bank loan
Government bonds
All of these answers are equity finance
A financial intermediary is a middleperson between
Buyers and sellers
Borrowers and lenders
Husbands and wives
Labour unions and firms
25. The principle of absolute advantage refers to the situation in which one producer:
Can produce a good in greater quantities than other producers.
Has access to more resources than other producers.
Can produce a good using less resources than other producers.
Has access to more resources than other producers.
51. If a tax is imposed on buyers of a good, the ________ curve of the good will shift ________ by the amount of the tax
Demand, up
Supply, up
Demand, down
Supply, down
26. The principle of comparative advantage suggests all of the following, EXCEPT
Free trade tends to cause bankruptcies and high unemployment.
Specialization allows producers to become more efficient.
Oas producers become more efficient, overall production increases, making everybody better off.
Oas producers become more efficient, overall production increases, making everybody better off.
National saving (or just saving) is equal to
Investment + consumption expenditures
None of these answers
Private saving + public saving
GDP - government purchases
GDP + consumption expenditures + government purchases
If government spending exceeds tax collections,
None of these answers
There is a budget surplus
There is a budget deficit
Public saving is positive
40. If a firm needs to increase its total revenue, the firm should ________ the price if the demand for its product is ________
ยข drop, elastic
O raise, inelastic
O drop, unit elastic
O raise, inelastic
41. Suppose that consumers' incomes rise by 3% and this causes demand for a good to increase by 4.5%. What is the income elasticity of demand?
1.5
2
0.5
52. If a tax is imposed on sellers of a good, the ________ curve of the good will shift ________ by the amount of the tax.
Demand, down
Supply, up
Demand, up
Supply, down
27. Suppose that Marko can type 10 pages per hour on the computer, while Jim can only type 8. Further suppose that Marko can review 5 articles per hour while Jim can only review 2. Based on this, we can say that:
Marko has a comparative advantage over Jim in typing
Jim has an absolute advantage over Marko in typing.
Jim has an absolute advantage over Marko in typing.
Marko has an absolute advantage over Jim in reviewing articles.
42. Suppose that a good has an income elasticity of demand of -3.0. This means that the good is
ยข inferior
O normal
O a substitute
O a complement
43. Suppose that two goods have a cross-price elasticity of demand of -0.6. This means that these goods are
Complements
Normal
substitute
Inferior
An increase in the budget deficit will
Raise the real interest rate and decrease the quantity of loanable funds demanded for investment
Lower the real interest rate and increase the quantity of loanable funds demanded for investment
Raise the real interest rate and increase the quantity of loanable funds demanded for investment
Lower the real interest rate and decrease the quantity of loanable funds demanded for investment
28. Which of the following shifts the demand for watches to the right
None of these answers
A decrease in the price of watch batteries if watch batteries and watches are complements
An increase in the price of watches
A decrease in the price of watches
44. The price of good A increases from $4.50 to $5.50. This causes the quantity demanded of good B to increase from 900 to 1100 units per month. Find the cross price elasticity of demand using the mid-point method.
1
0.5
1.5
45. Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is above the equilibrium point in the market, this would be an example of a:
ยข non-binding price ceiling
O binding price ceiling
O binding price floor
O non-binding price floor
29. All of the following shift the supply of watches to the right except
Manufacturers' expectation of lower watch prices in the future.
A decrease in the wage of workers employed to manufacture watches.
All of these answers cause an increase in the supply of watches.
An increase in the price of watches.
The amount of unemployment that the economy normally experiences is known as
Cyclical unemployment
The natural rate of unemployment
Efficiency wage unemployment
Frictional unemployment
46. Suppose that a regulation is in place that does not allow the price of a good to fall below $10. If this price is above the equilibrium point in the market, this would be an example of a:
ยข binding price floor
O binding price ceiling
O non-binding price ceiling
O non-binding price floor
47. Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is below the equilibrium point in the market, this would be an example of a
O non-binding price floor
O binding price floor
O non-binding price floor
ยข binding price ceiling
A minimum wage law tends to.
Help all teenagers because they receive a higher wage than they would otherwise
Create more unemployment in low-skill job markets than in high-skill job markets
Have no impact on unemployment as long as it is set above the competitive equilibrium wage
Create more unemployment in high-skill job markets than in low-skill job markets
53. If a tax is imposed on a good and the incidence of the tax ends up falling more heavily on the sellers than on the buyers, we can tell that:
Demand is less elastic than supply for that good
The tax was imposed on the buyers of the good
The tax was imposed on the sellers of the good
Demand is more elastic than supply for that good
48. If a price floor is in place and it is binding, the market will
O experience a shortage
O adjust the equilibrium price until it is equal to the price floor
O remain in equilibrium, unaffected by the price floor
ยข experience a surplus
30. If the price of a good is above the equilibrium price,
There is a surplus and the price will fall.
There is a surplus and the price will rise.
There is a shortage and the price will fall.
The quantity demanded is equal to the quantity supplied and the price remains unchanged.
31. If the price of a good is equal to the equilibrium price,
There is a surplus and the price will fall.
There is a shortage and the price will rise
There is a surplus and the price will rise.
There is a shortage and the price will fall.
The quantity demanded is equal to the quantity supplied and the price remains unchanged.
Which of the following is not a function of money?
Hedge against inflation
Medium of exchange
Unit of account
Store of value
Which of the following policy actions by a central bank is likely to increase the money supply?
Increasing the refinancing rate.
All of these will increase the money supply.
Buying government bonds in open market operations.
Increasing reserve requirements.
54. If a tax is imposed on a good and the incidence of the tax ends up falling more heavily on the buyers than on the sellers, we can tell that
Demand is more elastic than supply for that good
The tax was imposed on the buyers of the good
Demand is less elastic than supply for that good
The tax was imposed on the sellers of the good
32. Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect
ยข the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.
O the equilibrium quantity to rise and the equilibrium price to fall.
O the equilibrium quantity to rise and the equilibrium price to remain constant.
O the change in the equilibrium quantity to be ambiguous and the equilibrium price to rise.
O the change in the equilibrium quantity to be ambiguous and the equilibrium price to rise.
33. Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today?
O Price will increase; quantity will increase.
O Price will increase; quantity will decrease.
O Price will decrease; quantity is ambiguous.
O The impact on both price and quantity is ambiguous.
ยข Price will increase; quantity is ambiguous.
The three main tools of monetary policy are
Open-market operations, reserve requirements, and the discount rate
Fiat, commodity, and deposit money
The money supply, government purchases, and taxation
Government expenditures, taxation, and reserve requirements
Coin, currency, and demand deposits
Which of the following is NOT a characteristic of commodity money?
It must be set by decree.
It must have an intrinsic value.
It must be easily divisible, in order to make small payments.
It must be durable.
34. An inferior good is one for which an increase in income causes a(n)
ยข decrease in demand.
O increase in demand.
O decrease in supply.
Increase in supply
35. A good will tend to have an inelastic demand if
O the good is a luxury
ยข the market is defined very broadly
O the good has many close substitutes
o the time horizon is long
49. If a price ceiling is in place and it is binding, the market will
Experience a shortage
Experience a surplus
Adjust the equilibrium price until it is equal to the price floor
Remain in equilibrium, unaffected by the price floor
When prices rise at an extraordinarily fast rate, it is called
Disinflation
Hyperinflation
Deflation
Inflation
Hypoinflation
55. Of all the costs shown below incurred by Superior Airways, which is an example of an implicit cost
The salaries paid to the pilots
The rent that could be earned on an aircraft that is owned and used by Superior
The jet fuel bills
The purchases of parts needed for maintenance of the aircraft
If the price level doubles,
The value of money has been cut by half
The quantity demanded of money falls by half
Nominal income is unaffected
None of these answers
The money supply has been cut by half
36. A perfectly elastic demand is represented graphically by a
ยข horizontal demand curve
O vertical demand curve
O relatively flat demand curve
Relatively steep demand curve
37. What effect will an increase in the price have on total revenue if demand is elastic?
ยข Total revenue will decrease
O Total revenue will increase
O Total revenue will remain unchanged
In the long run, the demand for money is most dependent upon
The level of prices
The interest rate
The availability of banking outlets
The availability of credit cards
The quantity theory of money concludes that an increase in the money supply causes.
A proportional increase in real output
A proportional increase in prices
A proportional decrease in velocity
A proportional increase in velocity
A proportional decrease in prices
56. Everything that needs to be given up whenever a choice is made is called
An implicit cost
An explicit cost
A sunk cost
An opportunity cost
38. The price elasticity of demand tends to be more elastic
O when the demand curve is vertical
O when the demand curve becomes steeper
O at points further down and to the right along the demand curve
ยข at points further up and to the left along the demand curve
39. Suppose that Toyota company increases the price of its Camry model from $13,500 to $16,500. As a result of this, the quantity demanded of the Camry model decreases from 600,000 to 400,000 per year. Find the price elasticity of demand of the Camry using the mid-point method
0.5
1
2
Suppose that, because of inflation, a business in Russia must calculate, print, and mail a new price list to its customers each month. This is an example of
Shoeleather costs
Costs due to confusion and inconvenience
Arbitrary redistributions of wealth
Menu costs
Costs due to inflation induced tax distortions
57. Accounting profit is generally ________ than economic profit, because accountants ________ implicit costs in their calculations
Greater, consider
Greater, do not consider
Smaller, consider
Smaller, do not consider
Suppose that, because of inflation, people in Brazil economize on currency and go to the bank each day to withdraw their daily currency needs. This is an example of
Shoeleather costs
Costs due to inflation induced relative price variability which misallocates resources
Menu costs
Costs due to inflation induced tax distortions
Costs due to confusion and inconvenience
If there is an increase in the price of apples which causes consumers to purchase fewer kilograms of apples and more kilograms of oranges, the CPI will suffer from
Base year bias
Bias due to unmeasured quality change
Bias due to the introduction of new goods
Substitution bias
The "basket" on which the CPI is based is composed of
Products purchased by the typical consumer
Consumer production
Raw materials purchased by firms
Total current production
If a nation's GDP rises, then it must be the case that the nation's:
Income rises, but expenditure may rise or fall.
Saving rises, but income may rise or fall.
Income and expenditure both rise.
Income and saving both rise.
58. The law of diminishing marginal product of labor occurs when
Every additional worker hired reduces the quantity produced by the firm
Every additional worker hired contributes a smaller increase in production than previously hired workers
Every additional worker hired reduces the total costs of the firm
Every additional worker hired contributes a smaller increase in total costs than previously hired workers
59. The cost of raw materials will fall under the category of
Fixed costs
Implicit costs
Variable costs
Average fixed costs
Which of the following are expenditures included in the calculation of the Gross Domestic Product? I. Investment ii. Government Purchases iii. Net Exports iv. Consumption
All four
Only ii, iii, and iv
Only I, ii, and iii
Only I, iii, and iv
Assume households purchase all greeting cards. In calculating GDP, the government will include the value:
Of all the greeting cards and any paper that is added to inventory.
Of all the paper as well as all the greeting cards produced in the economy.
Of all the greeting cards but of none of the paper.
Some of the greeting cards and all the paper.
60. The factory rent payments made by a firm fall under the category of
Variable costs
Fixed costs
Short-run costs
Average variable costs
64. Economies of scale occur when ________ as the quantity of output increases.
Short-run average total cost falls
Long-run average total cost falls
Short-run average total cost rises
Long-run average total cost rises
Gross Domestic Product measures:
Both the total income in the economy and the total expenditure on the economy's output.
The total income in the economy, but not the total expenditure on the economy's output.
The total expenditure on the economy's output, but not the total income in the economy.
Neither the total income in the economy nor the total expenditure on the economy's output.
The price paid for any factor of production tends to be equal to:
The value of the marginal product of that input.
The wage rate.
The price of the product sold by the firm that inputs.
The price of the product sold by the firm that buys the inputs.
65. If a production function exhibits diminishing marginal product, the slope of the corresponding total-cost curve
Is linear (a straight line)
Becomes flatter as the quantity of output increases
Becomes steeper as the quantity of output increases
Could be any of these answers
66. If marginal costs equal average total costs,
Average total costs are falling
Average total costs are rising
Average total costs are maximized
Average total costs are minimized
As firms gradually acquire ever more technology, machinery and equipment, workers' productivity gradually ________, and workers wages gradually ________.
Rises, increase
Rises, decrease
Diminishes, decrease
Diminishes, increase
If there is a permanent increase in the demand for cars, car manufacturers will want to hire ________ workers, which will cause wages in the industry to ________.
More, rise
More, drop
Less, rise
Less, drop
67. Which of the following is NOT a characteristic of monopolistic competition
There are many sellers
There are many buyers
The goods are identical across sellers
Everybody is perfectly informed
If many students choose to study to become pharmacists, when all of these students eventually graduate, we can expect pharmacist's wages to ________, and the equilibrium number of pharmacists will ________.
Drop, increase
Rise, increase
Rise, decrease
Drop, decrease
The diagram depicting monopolistic competition in the short run
Is very similar to the short-run monopoly diagram
Is very similar to the short-run perfect competition diagram
Is very similar to the short-run oligopoly diagram
Is completely different from the diagrams of all the other types of markets
If the average-total-cost curve of a firm in monopolistic competition happens to be above the demand curve, it means
The firm will have to sell a lot in order to make a profit
The firm will be incurring losses in the short run
The firm will have to sell at a very high price in order to make a profit
Other firms are performing better in the market than the firm depicted in the diagram
In the long run, firms in monopolistic competition will see their price:
Become equal to their average variable cost
Remain well above their average total cost
Become equal to their marginal cost
Become equal to their average total cost
If firms in monopolistic competition are enjoying positive economic profits, in the long run:
They will continue enjoying such profits, since new firms will be unable to enter the industry
This will attract new firms into the industry, causing prices to drop and profits to disappear
Consumers will cease wanting to buy the good and will switch to cheaper alternatives
The government will have to step in and regulate the price
In long-run equilibrium, firms in monopolistic competition ________ than firms in perfect competition
Charge a lower price
Have bigger profits
Have lower costs
Produce less
In long-run equilibrium in a monopolistically competitive market, the price will be equal to
Marginal cost
Marginal revenue
Average total cost
Average variable cost
An increase in the demand for apples will cause all but which of the following?
An increase in the value of the marginal product of apple pickers
A decrease in the number of apple pickers employed
An increase in the price of apples
An increase in the wage of apple pickers
A decrease in the supply of farm tractors will cause all but which of the following?
An increase in the wage of farm worker
An increase in the rental rate for tractors
Decrease in the rental rate of farmland
An increase in the value of the marginal product of tractors
If both input and output markets are competitive and firms are profit maximizing, then in equilibrium each factor of production earns
An amount equal to the price of output times total output
The amount allocated by the political process
An equal share of output
The value of its marginal product
All of the following are things that can make the labor supply curve shift, EXCEPT:
Changes in tastes of workers.
Changes in the number of customers buying a good.
Changes in alternative job opportunities.
Changes in immigration laws.
An individual firm's demand for a factor of production
Slopes downward due to the factor's diminishing marginal product
Slopes downward because an increase in the production of output reduces the price at which the output can be sold in a competitive market, thereby reducing the value of the marginal product as more of the factor is used
Slopes upward due to the factor's increasing marginal product
Is perfectly elastic (horizontal) if the factor market is perfectly competitive
If the supply curve for labour is backward bending, and if the wage of a worker increases, she might choose to work:
More hours per week, since she can earn the same income working fewer hours.
Fewer hours per week, since every hour of leisure is cheaper than before.
Fewer hours per week, since she can earn the same income working fewer hours.
More hours per week, since she needs to work more hours to earn the same income.
An increase in the demand for a firm's output
Decreases the prosperity of the firm but increases the prosperity of the factors hired by the firm
Decreases the prosperity of both the firm and the factors hired by the firm
Increases the prosperity of the firm but decreases the prosperity of the factors hired by the firm
Increases the prosperity of both the firm and the factors hired by the firm
A competitive, profit-maximizing firm should hire workers up to the point where
The wage, the rental price of capital, and the rental price of land are all equal
The marginal product of labour equals zero and the production function is maximized
The value of the marginal product of labour equals the wage
The marginal product of labour equals the wage
All of the following will cause the value of the marginal product of labor to increase, EXCEPT:
An increase in the price of the good sold by the firm.
An increase in the number of workers employed by the firm.
A new production technology is developed and implemented by the firm.
An increase in the quantity of other factors of production used by the firm.
Which of the following statements is FALSE?
The value of the marginal product of labor diminishes as more workers are hired.
The value of the marginal product of labor is the same thing as the marginal product of labor.
The value of the marginal product of labor curve represents the firm's demand for labor curve.
The value of the marginal product of labor represents the benefit to the firm from hiring an additional worker.
Which of the following is not true with regard to workers who have a high value of marginal product? These workers
Usually have little capital with which to work
Have skills that are in relatively scarce supply
Produce output for which there is great demand
Are usually highly paid
An increase in the price of automobiles shifts the demand for autoworkers to the
Left and decreases the wage
Right and increases the wage
Right and decreases the wage
Left and increases the wage
The property of diminishing marginal product applies
To workers and any other variable inputs in the short run
Only to workers in the short run
Only to workers in the long run
The property of diminishing marginal product applies
Only to workers in the short run
To workers and any other variable inputs in the short run
Only to workers in the long run
Applies to workers and any other variable inputs in the long run
When capital is owned by the firm as opposed to being directly owned by households, capital income may take any of the following forms except
Increases in stocks of goods
Interest
Dividends
Retained earnings
Factors of production are
The coefficients in a production function
The characteristics of a market that determine how much is produced
The outputs from a production function
The inputs used to produce goods and services
Factors of production are
The coefficients in a production function
The characteristics of a market that determine how much is produced
The outputs from a production function
The inputs used to produce goods and services
50. If a price floor is in place and it is not binding, the market will:
Experience a shortage
Adjust the equilibrium price until it is equal to the price floor
Experience a surplus
Remain in equilibrium, unaffected by the price floor
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