188. A variable factor of production is defined in the text as one: a) that can

Question

188. A variable factor of production is defined in the text as one:
a) that can perform several different functions. b) that is able to produce more or less during some time period.
c) whose quantity can be changed in a particular time period. d) a and c are ture, but not b.

216. If a firm experiences lower costs per unit as it increases production in the long run, this is an example of
a) economies of scale. b) diseconomies of scale. c) increasing opportunity costs. d) scale reduction.

165. The income effect refers to:
a)changes in income because of changes in business investment.
b) changes in money or nominal income because of changes in wages.
c) a change in the quantity demanded of a good becuase of an implicit change in the buyer's income caused by a change in the price of a good or servie.
d) a change in the quantity demanded of a good because of a change in the buyer's money income.

167. The larger the substitution effect the ____ the absolute value of the price elasticity of demand.
a) smaller b) greater c) greater the change in d) less the change in.

168. When the price of a normal good falls, the substitution effect contributes to ___ in the quantity demanded and the income effect ___ the substitution effect.
a) decrease; reinforces
b) increase; reinforces
c) increase; opposes
d) decrease; opposes

174. In the case of inferior goods, the substtution effect and the income effect:
a) move in opposite directions
b) move in the same direction
c) cancel each other out in every case
d) will in all cases cause demand to be upsloping

Explanation / Answer

188. c)
216. a)
165. c)
167 b)
168 b)
174 a)

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