Ivy Software Mba Prepworks Fundamentals Of Economics Study Guide Rated A+

The menu costs effect {Ans: argues that because it can be expensive to change menus and pricing boards and because the business owners don't want to constantly tell their customers that they have changed their prices, they don't do it often. This implies that when there is a change in the price level because of a contraction in the economy, for example, producers keep their prices unchanged.}Imports {Ans: include all final goods and services produced by foreigners outside the U.S. and purchased by a member of the domestic population.}Consider the market for pork, suppose that the price of beef, a substitute for pork, increases. Because of this change in the price of beef, the equilibrium quantity of pork will...? {Ans: Increase because increase in price of beef causes demand curve for pork to shift North East. B/c of this shift, the equilibrium quantity of pork will increase.}The profit maximizing rule states that a business maximizes profits when it produces where total revenue equals total cost (t/f) {Ans: False.}price takers {Ans: businesses operating in a perfectly competitive industry}Aggregate supply curve {Ans: reflects the total quantity of goods and services that producers in the economy are