Figure 4.5 illustrates a set of supply and demand curves for hamburgers. A decrease in supply and a decrease in quantity demanded are represented by a movement from
A) point c to point a. B) point c to point d. C) point b to point c. D) point a to point d.
B
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In the short run, a perfectly competitive firm's economic profits
A) must equal zero, that is, the firm earns a normal profit. B) must be positive. C) might be positive, negative (an economic loss), or zero (a normal profit). D) must be negative, that is the firm must incur an economic loss.
If a state government wants to collect the maximum tax revenue from a unit excise tax, which of the following would they tax?
A) cigarettes B) beef hamburgers C) luxury cars D) concert t-shirts
If average costs of production decline with increases in output for a particular large firm in an industry:
a. many small firms will be more efficient than the single large firm in the industry. b. the single large firm will be more efficient than many small firms in the industry. c. product diversification will be necessary for the firm to spread its overhead. d. diseconomies of scale become significant as its output increases. e. its variable cost of production will exceed its fixed costs.
Answer the following statements true (T) or false (F)
1. Most economists today would agree with the view that "money doesn't matter" in macroeconomic theory. 2. Rational expectations theory allows for temporary changes in output due to expansionary policy, whereas adaptive expectations theory holds that no such changes in output could occur. 3. Mainstream economists have adopted some ideas from RET and some rational expectations assumptions are being incorporated into current macroeconomic models. 4. Monetarists and rational expectation theorists believe that cost-push inflation as impossible in the long run in the absence of excessive money supply growth.