If MU = MC = P, an economist can judge with certainty that the distribution of output is
A. fair.
B. equal.
C. unbiased.
D. efficient.
Answer: D
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When the competitive market is using its resources efficiently, the
A) total amount of consumer surplus is maximized. B) total amount of producer surplus is maximized. C) sum of the total amount of consumer surplus plus the total amount of producer surplus is maximized. D) sum of the total amount of consumer surplus plus the total amount of producer surplus equals zero.
The goal of maximum sustainable employment is roughly equivalent to achieving ________
A) the natural rate of unemployment B) an inflation target that is slightly above zero C) the elimination of frictional and structural unemployment D) all of the above E) none of the above
Economists use a preference map to illustrate that
A) more is better than less. B) preferences are transitive. C) preferences are complete. D) All of the above.
If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that:
A. technological progress has occurred. B. economies of scale are being realized. C. the firm is encountering diminishing returns. D. diseconomies of scale are being encountered.