If the government institutes a specific tax for a good
A) the producer simply passes the entire tax on to the consumer.
B) the producer must absorb the entire tax.
C) the producer can generally only pass part of the tax onto the consumer.
D) the equilibrium price drops.
C
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In the long run, perfectly competitive firms earn zero economic profit. Why do firms enter an industry when they know that in the long-run they will not earn any profit?
What will be an ideal response?
Which of the following is not a characteristic that makes medical care different from other commodities?
a. Demand for medical care is irregular. b. Sellers have more information than buyers. c. Third-party payers abound. d. For-profit providers play a major role in delivering medical care. e. The transaction itself if filled with uncertainty.
If a government regulation states that fluorocarbon emissions should be abated by 75 percent but the optimal level of pollution abatement is 85 percent, which of the following must be true?
a. The free market will not reduce pollution by less than 85 percent. b. The free market will accomplish 85 percent abatement, but it will be inefficient. c. If only 75 percent of the pollution is abated, the society will be better off than if 85 percent had been abated. d. If only 75 percent of the pollution is abated, the society will be worse off than if 85 percent had been abated. e. If 75 percent of the pollution is abated, then in the next period the government should set the abatement level at 95 percent.
As marginal physical product diminishes, marginal revenue product
A. Rises at a diminishing rate and eventually falls. B. Also diminishes. C. Rises. D. Is not affected.