26 May ____ 31. Which of the following statements is correct?
Question
____ 31. Which of the following statements is correct?
a. Neither economic theory nor evidence from the U.S. economy suggests that there is a close link
between productivity and real wages.
b. Economic theory suggests that there is a close link between productivity and real wages, but
evidence from the U.S. economy fails to confirm that link.
c. Evidence from the U.S. economy suggests a close link between productivity and real wages, but
economic theory provides no basis for such a link.
d. Both economic theory and evidence from the U.S. economy suggest that there is a close link
between productivity and real wages.
____ 32. Laura consumes only beer and chips. Her indifference curves are all bowed inward. Consider the bundles (2,6), (4,4),
and (6,2). If Laura is indifferent between (2,6) and (6,2), then Laura must
a. prefer (4,4) to (6,2). c. prefer (6,2) to (4,4).
b. be indifferent between (4,4) and (6,2). d. prefer (2,6) to (4,4).
____ 33. Figure 14-9
MC
ATC
P1
Q1
(a)
P0
P2
Q2 Quantity
Price
P1
QA
(b)
P0
P2
QBQD QC
S0 S1
D0
D1
A
B
C
D
Quantity
Price
Refer to Figure 14-9. Assume that the market starts in equilibrium at point A in panel (b). An increase in demand from D0 to D1 will result in
a. a new market equilibrium at point D.
b. an eventual increase in the number of firms in the market and a new long-run equilibrium at point
C.
c. rising prices and falling profits for existing firms in the market.
d. falling prices and falling profits for existing firms in the market.
____ 34. Which of the following statements is correct for a monopolist?
i) The firm maximizes profits by equating marginal revenue with marginal cost.
ii) The firm maximizes profits by equating price with marginal cost.
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