If a nation has a higher level of technology than another nation it can produce:
A. more with no use of human capital.
B. more outputs with the same level of physical capital.
C. less with the same amount of physical capital.
D. the same output with the same level of inputs.
Answer: B
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Assume there is a decrease in the market demand for a good sold by price-taking firms that are initially producing the profit-maximizing level of output. How will the market adjust over time?
A) Firms will enter the market, causing price to rise until losses are eliminated. B) Firms will enter the market, causing price to fall until positive profits are eliminated. C) Firms will exit the market, causing price to rise until losses are eliminated. D) Firms will exit the market, causing price to fall until positive profits are eliminated.
For most goods and services the income elasticity of demand is
A) negative. B) positive. C) invisible. D) inverse.