If China decides to enact laws to clean up the environment, what would be the effect on GDP?
A) GDP would increase reflecting the fact that the environment would be cleaner.
B) GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls.
C) GDP would increase as the citizens of China were made happier as the environment was cleaned up.
D) GDP would increase as the environmental costs of pollution were not included in the calculation of GDP.
Answer: B
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In the long-run equilibrium in a perfectly competitive market, the economic profit of the firms is
A) positive. B) negative. C) zero. D) increasing.
If actual inflation differs from expected inflation, what is the slope of the aggregate supply curve?
a. It is horizontal in the short and long run. b. It is vertical in the short and long run. c. It is vertical in the short run and upward sloping in the long run. d. It is upward sloping in the short run and vertical in the long run.
Which person provides an example of structural unemployment?
A. A fast-food worker who quits that job to find a better-paying job. B. A student who goes to school instead of working. C. A worker who stays at home to take care of children. D. A worker skilled at running an obsolete machine.
In a Bertrand model, market power is a function of
A) marginal cost. B) the number of firms. C) price elasticity of supply. D) product differentiation.