Higher inflation causes

• firms to change prices less often and reduces relative-price variability.
• firms to change prices less often and increases relative-price variability.
• firms to change prices more often and increases relative-price variability.
• firms to change prices more often and reduces relative-price variability.

How can a point outside the production possibilities frontier become feasible?

• By a decrease in consumer demand or preferences (3)
• By an improvement in technology or productivity (2)
• By an increase in the quantity or quality of resources (1)
• (1) and (2) are correct

How do incentives affect people’s behavior?

• Incentives affect people’s behavior by making some actions more or less desirable
• Incentives affect people’s behavior only if they are strong enough
• Incentives do not affect people’s behavior, only preferences do
• Incentives affect people’s behavior only if they are monetary

How do intermediate goods differ from final goods in the calculation of GDP?

• They are produced for personal use
• They are not included in the final GDP calculation
• They contribute directly to economic growth
• They are considered legal goods

How do you calculate the price elasticity of demand using the midpoint method?

• By dividing the change in quantity demanded by the average quantity demanded and dividing the change in price by the average price (2)
• Both (1) and (2)
• By dividing the percentage change in quantity demanded by the percentage change in price (1)
• By dividing the percentage change in price by the percentage change in quantity demanded (2)

How do you calculate the price elasticity of demand using the midpoint method?

• By dividing the percentage change in quantity demanded by the percentage change in price (1)
• Both (1) and (2)
• By dividing the percentage change in price by the percentage change in quantity demanded (2)
• By dividing the change in quantity demanded by the average quantity demanded and dividing the change in price by the average price (2)

How do you write a linear demand function? (Slope: b)

• Qd = b - aP
• Qd = a + bP
• Qd = a - bP
• Qd = b + aP

How do you write a linear supply function? (Slope: d)

• Qs = c - dP
• Qs = d - cP
• Qs = c + dP
• Qs = d + cP

How does a price ceiling affect consumer surplus and producer surplus?

• It decreases both consumer surplus and producer surplus
• It increases both consumer surplus and producer surplus
• It increases consumer surplus and decreases producer surplus
• It decreases consumer surplus and increases producer surplus

How does a price ceiling affect consumer surplus and producer surplus?

• It decreases consumer surplus and increases producer surplus
• It decreases both consumer surplus and producer surplus
• It increases consumer surplus and decreases producer surplus
• It increases both consumer surplus and producer surplus