In the circular flow model, producers
A) sell goods and services in the input market.
B) and households spend earnings from resource sales on goods and services in the factor market.
C) hire resources sold by households in the factor market.
D) spend earnings from resource sales on goods and services in the product market.
Answer: C
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In the probit model Pr(Y = 1 = ?(?0 + ?1X), ?
A) is not defined for ?(0). B) is the standard normal cumulative distribution function. C) is set to 1.96. D) can be computed from the standard normal density function.
Suppose a monopolist produces a positive level of output. If marginal costs are zero, this output level will occur where price elasticity of demand is exactly -1 unless there are recurring fixed costs.
Answer the following statement true (T) or false (F)