Econ Test 1. (ch. 2,4,5,6)

In the simple circular-flow diagram, which of the following is not true. a. Households buy all the goods and services that firms produce. b. Firms own the factors of production. c. Land, labor, and capital flow from households to firms. d. Households own the factors of production.

Firms own the factors of production

In the circular-flow diagram, which of the following is not a factor of production? a. Land b. Labor c. Money d. Capital

Money

Which of the following changes would not shift the demand curve for a good or service? a. A change in the price of the good or service. b. A change in income. c. A change in expectations about the future price of the good or service. d. A change in the price of a related good or service.

a. A change in the price of the good or service.

Which of the following transactions does not take place in the markets for factors of production in the circular-flow diagram? a. A woman buys corn for dinner b. A construction company rents trucks for its business c. A landowner leases land to a farmer d. A farmer hires a teenager to help with harvest

a. A woman buys corn for dinner

Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market? a. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. b. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. c. Equilibrium quantity and price would increase. d. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.

a. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Which of the following events would cause a movement upward and to the left along the demand curve for olives? a. The price of olives rises. b. Consumer income decreases, and olives are a normal good. c. The number of people who purchase olives decreases. d. The price of pickles decreases, and pickles are a substitute for olives.

a. The price of olives rises.

Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct? a. The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve. b. Given two prices with which to calculate the price elasticity of supply, that elasticity would be the same for both curves. c. The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve. d. A decrease in demand will increase total revenue if the steeper supply curve is relevant, while a decrease in demand will decrease total revenue if the flatter supply curve is relevant.

a. The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.

A decrease in supply will cause the largest increase in price when a. both supply and demand are inelastic. b. demand is elastic and supply is inelastic. c. both supply and demand are elastic. d. demand is inelastic and supply is elastic.

a. both supply and demand are inelastic.

Today, producers changed their expectations about the future. This change a. can affect today's supply. b. can affect future supply, but not today's supply. c. can cause a movement along the supply curve. d. cannot affect either today's supply or future supply.

a. can affect today's supply.

According to the circular-flow diagram, if Jalyssa is a worker who delivers flowers for Happy Day Flower Company, she participates a. in the markets for factors of production exchanging labor for income. b. in the markets for goods and services exchanging flowers for wages, rent, and profit. c. in the markets for goods and services exchanging labor for income. d. in the markets for factors of production exchanging flowers for revenue.

a. in the markets for factors of production exchanging labor for income.

If the price elasticity of supply is 1.2, and price increased by 5 percent, quantity supplied would a. increase by 6 percent. b. increase by 4.2 percent. c. decrease by 6 percent. d. decrease by 4.2 percent.

a. increase by 6 percent.

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is a. inelastic. b. perfectly inelastic. c. unit elastic. d. elastic.

a. inelastic.

Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, the demand for tires a. is unaffected, and the supply of tires could increase, decrease, or stay the same. b. is unaffected, and the supply of tires decreases. c. decreases, and the supply of tires increases. d. is unaffected, and the supply of tires increases.

a. is unaffected, and the supply of tires could increase, decrease, or stay the same.

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will a. lower both price and total revenues. b. raise both price and total revenues. c. raise price and lower total revenues. d. lower price and raise total revenues.

a. lower both price and total revenues.

A good will have a more inelastic demand, the a. more it is regarded as a luxury. b. longer the period of time. c. greater the availability of close substitutes. d. broader the definition of the market.

a. more it is regarded as a luxury. b. longer the period of time. c. greater the availability of close substitutes. d. broader the definition of the market.

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are a. substitute goods. b. inferior goods. c. normal goods. d. complementary goods.

a. substitute goods.

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the a. supply of bicycles will shift to the left. b. demand for bicycle assembly workers will increase. c. supply of bicycles will shift to the right. d. firm must increase output to maintain profit levels.

a. supply of bicycles will shift to the left.

If something happens to alter the quantity demanded at any given price, then a. the demand curve shifts. b. the demand curve becomes steeper. c. we move along the demand curve. d. the demand curve becomes flatter.

a. the demand curve shifts.

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that a. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic. b. the mayor thinks demand is elastic, and the city manager thinks demand is inelastic. c. both the mayor and the city manager think that demand is inelastic. d. both the mayor and the city manager think that demand is elastic.

a. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.

Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a result, the quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is a. 0.43. b. 2.33. c. 2.89. d. 0.35.

b. 2.33.

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase total revenue? a. 1 b. 4 c. 0.4 d. 0

b. 4

Which of the following changes would not shift the supply curve for a good or service? a. A change in production technology b. A change in the price of the good or service c. A change in input prices d. A change in expectations about the future price of the good or service

b. A change in the price of the good or service

Which of the following would shift the demand curve for gasoline to the right? a. An increase in the price of cars, a complement for gasoline b. An increase in consumer income, assuming gasoline is a normal good c. A decrease in the expected future price of gasoline d. A decrease in the price of gasoline

b. An increase in consumer income, assuming gasoline is a normal good

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event? a. Sellers would not be able to produce and sell as much as before at each relevant price. b. Buyers would not be willing to buy as much as before at each relevant price. c. The equilibrium price would rise. d. The supply would decrease.

b. Buyers would not be willing to buy as much as before at each relevant price.

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation? a. Consumers have experienced an increase in income, and beef-production technology has improved. b. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy. c. The demand curve for beef must be positively sloped. d. The price of chicken has risen, and the price of steak sauce has fallen.

b. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy.

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest? a. One month after the price increase b. One year after the price increase c. Three months after the price increase d. Immediately after the price increase

b. One year after the price increase

What will happen in the market for shotgun-shell ammunition now if buyers expect higher shotgun-shell prices in the near future? a. The demand for shotgun-shell ammunition will be unaffected. b. The demand for shotgun-shell ammunition will increase. c. The demand for shotgun-shell ammunition will decrease. d. The supply of shotgun-shell ammunition will increase.

b. The demand for shotgun-shell ammunition will increase.

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them? a. Both the equilibrium price and quantity would increase. b. The equilibrium price would decrease, and the equilibrium quantity would increase. c. The equilibrium price would increase, and the equilibrium quantity would decrease. d. Both the equilibrium price and quantity would decrease.

b. The equilibrium price would decrease, and the equilibrium quantity would increase.

When constructing a production possibilities frontier, which of the following assumptions is not made? a. The technology available to firms is given. b. The quantities of the factors of production that are available are increasing over the relevant time period. c. The economy produces only two goods or two types of goods. d. Firms produce goods using factors of production.

b. The quantities of the factors of production that are available are increasing over the relevant time period.

Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1,000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 1,050 units of food and 47 machines. Which of the following statements is correct? a. Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. b. The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food. c. Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47. d. In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies.

b. The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food.

Which of the following is likely to have the most price elastic demand? a. Blue jeans b. Tommy Hilfiger jeans c. Clothing d. Pants

b. Tommy Hilfiger jeans

Which of the following is likely to have the most price inelastic demand? a. A generic mint-flavored toothpaste b. Toothpaste c. Mint-flavored toothpaste d. Colgate mint-flavored toothpaste

b. Toothpaste

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see a. an increase in the demand for energy drinks. b. a decrease in the demand for energy drinks. c. no change in the demand for energy drinks. d. a decrease in the supply of energy drinks.

b. a decrease in the demand for energy drinks.

If the demand for a good falls when income falls, then the good is called a. an inferior good. b. a normal good. c. a regular good. d. an ordinary good.

b. a normal good.

If a surplus exists in a market, then we know that the actual price is a. above the equilibrium price, and quantity demanded is greater than quantity supplied. b. above the equilibrium price, and quantity supplied is greater than quantity demanded. c. below the equilibrium price, and quantity supplied is greater than quantity demanded. d. below the equilibrium price, and quantity demanded is greater than quantity supplied.

b. above the equilibrium price, and quantity supplied is greater than quantity demanded.

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the a. closer to the vertical axis the demand curve will sit. b. flatter the demand curve will be. c. steeper the demand curve will be. d. further to the right the demand curve will sit.

b. flatter the demand curve will be.

Suppose that when the price of good X increases from $800 to $850, the quantity demanded of good Y increases from 65 to 70. Using the midpoint method, the cross-price elasticity of demand is about a. −0.1, and X and Y are complements. b. −1.2, and X and Y are complements. c. 1.2, and X and Y are substitutes. d. 0.1, and X and Y are substitutes.

c. 1.2, and X and Y are substitutes.

A manufacturer produces 400 units when the market price is $10 per unit and produces 600 units when the market price is $12 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about a. 200. b. 2.0. c. 2.2. d. 0.45.

c. 2.2.

Last year, Tess bought five handbags when her income was $54,000. This year, her income is $60,000, and she purchased seven handbags. Holding other factors constant and using the midpoint method, it follows that Tess's income elasticity of demand is about a. 0.32, and Tess regards handbags as inferior goods. b. 3.17, and Tess regards handbags as inferior goods. c. 3.17, and Tess regards handbags as normal goods. d. 0.32, and Tess regards handbags as normal goods.

c. 3.17, and Tess regards handbags as normal goods.

For which of the following goods is the income elasticity of demand likely highest? a. Water b. Housing c. Diamonds d. Hamburgers

c. Diamonds

In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services? a. Goods and services b. Wages, rent, and profit c. Dollars spent on goods and services d. Dollars paid to land, labor, and capital

c. Dollars spent on goods and services

Which of the following statements is valid when the market supply curve is vertical? a. An increase in market demand will not increase the equilibrium price. b. Supply is perfectly elastic. c. Market quantity supplied does not change when the price changes. d. An increase in market demand will increase the equilibrium quantity.

c. Market quantity supplied does not change when the price changes.

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell? a. Quantity would fall, and the effect on price would be ambiguous. b. Price would rise, and the effect on quantity would be ambiguous. c. Price would fall, and the effect on quantity would be ambiguous. d. Quantity would rise, and the effect on price would be ambiguous.

c. Price would fall, and the effect on quantity would be ambiguous.

Which of the following would shift the supply of Green Bay Packers football jerseys to the left? a. The technology of sewing machines used to make the jerseys improves. b. The price of the jerseys increases by $15. c. The cost of the fabric used to make the jerseys increases. d. The Green Bay Packers make it to the Super Bowl.

c. The cost of the fabric used to make the jerseys increases.

If muffins and bagels are substitutes, a higher price for bagels would result in a. a decrease in the demand for muffins. b. a decrease in the demand for bagels. c. an increase in the demand for muffins. d. an increase in the demand for bagels.

c. an increase in the demand for muffins.

Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a. a complementary good. b. a substitute good. c. an inferior good. d. a normal good.

c. an inferior good.

Demand is said to be price elastic if a. demand shifts substantially when income or the expected future price of the good changes. b. the price of the good responds substantially to changes in demand. c. buyers respond substantially to changes in the price of the good. d. buyers do not respond much to changes in the price of the good.

c. buyers respond substantially to changes in the price of the good.

If a seller in a competitive market chooses to charge more than the going price, then a. the owners of the raw materials used in production would raise the prices for the raw materials. b. the sellers' profits must increase. c. buyers will make purchases from other sellers. d. other sellers would also raise their prices.

c. buyers will make purchases from other sellers.

The price elasticity of demand measures a. the movement along a supply curve when there is a change in demand. b. how much more of a good consumers will demand when incomes rise. c. buyers' responsiveness to a change in the price of a good. d. the extent to which demand increases as additional buyers enter the market.

c. buyers' responsiveness to a change in the price of a good.

If the cross-price elasticity of two goods is negative, then the two goods are a. inferior goods. b. normal goods. c. complements. d. necessities.

c. complements.

A decrease in the price of a good will a. decrease supply. b. increase quantity supplied. c. decrease quantity supplied. d. increase supply.

c. decrease quantity supplied.

Equilibrium quantity must decrease when demand a. increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. b. decreases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. c. decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. d. increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease.

c. decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

The law of demand states that, other things equal, when the price of a good a. falls, the demand for the good rises. b. rises, the quantity demanded of the good rises. c. falls, the quantity demanded of the good rises. d. rises, the demand for the good falls.

c. falls, the quantity demanded of the good rises.

If the demand for donuts is elastic, then a decrease in the price of donuts will a. There is not enough information to answer this question. b. decrease total revenue of donut sellers. c. increase total revenue of donut sellers. d. not change total revenue of donut sellers.

c. increase total revenue of donut sellers.

An economy's production of two goods is efficient if a. the opportunity cost of producing more of one good is zero. b. the goods are produced using only some of society's available resources. c. it is impossible to produce more of one good without producing less of the other. d. all members of society consume equal portions of the goods.

c. it is impossible to produce more of one good without producing less of the other.

Goods with many close substitutes tend to have a. price elasticities of demand that are unit elastic. b. income elasticities of demand that are negative. c. more elastic demands. d. less elastic demands.

c. more elastic demands.

For a good that is a luxury, demand a. tends to be inelastic. b. has unit elasticity. c. tends to be elastic. d. cannot be represented by a demand curve in the usual way.

c. tends to be elastic.

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that a. there will be a large opportunity cost if the nation tries to increase production of any good. b. the nation is producing an efficient combination of goods. c. the nation is not using all available resources or is using inferior technology or both. d. the nation is producing beyond its capacity, so inflation will occur.

c. the nation is not using all available resources or is using inferior technology or both.

A key determinant of the price elasticity of supply is the a. price elasticity of demand. b. income of consumers. c. time horizon. d. importance of the good in a consumer's budget.

c. time horizon.

When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is a. 0.67, and an increase in price will result in a decrease in total revenue for good A. b. 1.50, and an increase in price will result in an increase in total revenue for good A. c. 1.50, and an increase in price will result in a decrease in total revenue for good A. d. 0.67, and an increase in price will result in an increase in total revenue for good A.

d. 0.67, and an increase in price will result in an increase in total revenue for good A.

If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a a. 40 percent decrease in the quantity demanded. b. 5 percent decrease in the quantity demanded. c. 0.2 percent decrease in the quantity demanded. d. 20 percent decrease in the quantity demanded.

d. 20 percent decrease in the quantity demanded.

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by a. 30 percent. b. 80 percent. c. 250 percent. d. 40 percent.

d. 40 percent.

Suppose the price elasticity of supply for cheese is 0.6 in the short run and 1.4 in the long run. If an increase in the demand for cheese causes the price of cheese to increase by 15 percent, then the quantity supplied of cheese will increase by a. 1.7 percent in the short run and 0.7 percent in the long run. b. 25 percent in the short run and 10.7 percent in the long run. c. 0.4 percent in the short run and 4.6 percent in the long run. d. 9 percent in the short run and 21 percent in the long run.

d. 9 percent in the short run and 21 percent in the long run.

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded? a. An increase in the price of the good from $7.50 to $10 b. A 7.5 increase in the price of the good c. An increase in the price of the good from $10 to $17.50 d. A 13.33 percent increase in the price of the good

d. A 13.33 percent increase in the price of the good

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. c. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. d. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.

d. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.

Which of the following is not held constant in a demand schedule? a. Expectations b. Income c. Tastes d. Price

d. Price

Which of the following events could cause an increase in the supply of ceiling fans? a. The average temperature rises over time. b. There is an increase in the price of the motor that powers ceiling fans. c. There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes. d. The number of sellers of ceiling fans increases.

d. The number of sellers of ceiling fans increases.

Which of the following events would cause the price of oranges to fall? a. There is a shortage of oranges. b. The FDA announces that bananas cause strokes, and oranges and bananas are substitutes. c. At the current price, quantity demanded is greater than quantity supplied. d. The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges.

d. The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges.

The current price of blue jeans is $30 per pair, but the equilibrium price of blue jeans is $25 per pair. As a result, which of the following statements is not true? a. The quantity supplied of blue jeans exceeds the quantity demanded of blue jeans at the $30 price. b. There is a surplus of blue jeans at the $30 price. c. The equilibrium quantity of blue jeans exceeds the quantity demanded at the $30 price. d. There is a shortage of blue jeans at the $30 price.

d. There is a shortage of blue jeans at the $30 price.

Which of the following is not a characteristic of a perfectly competitive market? a. Sellers must accept the price the market determines. b. Different sellers sell identical products. c. There are many sellers. d. There is no free entry or exi

d. There is no free entry or exit.

Which of the following demonstrates the law of supply? a. When car production technology improved, car producers increased their supply of cars. b. When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. c. When leather became more expensive, belt producers decreased their supply of belts. d. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.

d. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.

If the demand for a product increases, then we would expect equilibrium price a. to decrease and equilibrium quantity to increase. b. and equilibrium quantity both to decrease. c. to increase and equilibrium quantity to decrease. d. and equilibrium quantity both to increase.

d. and equilibrium quantity both to increase.

Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would a. increase. b. change but you don't know how without more information. c. be unaffected. d. decrease.

d. decrease.

Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus's a. income elasticity of demand for cigarettes is 0. b. price elasticity of demand for cigarettes is infinite. c. demand for cigarettes is unit elastic. d. demand for cigarettes is perfectly inelastic.

d. demand for cigarettes is perfectly inelastic.

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. Using the midpoint method, we can conclude that for Heather, macaron a. and soy-burgers are both inferior goods with income elasticities equal to -1. b. is an inferior good and soy-burgers are normal goods; both have income elasticities of 1. c. and soy-burgers are both normal goods with income elasticities equal to 1. d. is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1.

d. is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1.

A competitive market is a market in which a. an auctioneer helps set prices and arrange sales. b. the forces of supply and demand do not apply. c. there are only a few sellers. d. no individual buyer or seller has any significant impact on the market price.

d. no individual buyer or seller has any significant impact on the market price.

The bowed-outward shape of the production possibilities frontier can be explained by the fact that a. the only way to get more of one good is to get less of the other. b. economic growth is always occurring. c. all resources are scarce. d. the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.

d. the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.

If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in a. higher prices and higher total revenue from marijuana sales. b. higher prices but lower total revenue from marijuana sales. c. the same price but lower total revenue from marijuana sales. d. the same price and higher total revenue from marijuana sales.

d. the same price and higher total revenue from marijuana sales

If something happens to alter the quantity supplied at any given price, then a. the supply curve becomes steeper. b. we move along the supply curve. c. the supply curve becomes flatter. d. the supply curve shifts.

d. the supply curve shifts.

In the simple circular-flow diagram, the participants in the economy are a. households and government. b. households, firms, and government. c. firms and government. d. households and firms.

households and firms.