When prices of products are set below equilibrium,
A. society’s resources are inefficiently allocated.
B. firms expand output to increase profits.
C. firms earn excessively high profits.
D. consumers benefit from surpluses of cheap goods.
Answer: A
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Two companies, Dirty Inc. and Filthy Inc., each of which has access to 5 different production processes, each of which has a different cost and produces a different amount of pollution. The daily costs of the processes and the number of tons of smoke emitted are shown in the table below.ProcessABCDE(smoke/day)(4 tons/day)(3 tons/day)(2 tons/day)(1 tons/day)(0 tons/day)Cost to Dirty Inc. ($/day)$100$200$380$740$1,460Cost to Filthy Inc. ($/day)$400$430$490$580$700 If pollution is unregulated, then a total of ________ tons of smoke will be emitted each day.
A. 1 B. 2 C. 8 D. 4
A uniform-abatement policy is:
A. inefficient because it does not exploit the differences in abatement costs among firms. B. efficient because an equal amount of pollution is assigned to each firm. C. inefficient because it incurs relatively low compliance costs. D. efficient because it helps firms lower their production costs.
Which of the following statements is TRUE?
A) Real GDP fluctuates around potential GDP. B) Potential GDP fluctuates around real GDP. C) Potential GDP is the same as real GDP. D) When all of the economy's resources are fully employed, the value of production is called real GDP.