On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. An economist would suggest that
a. every electric customer has an incentive to prevent the system from overloading, so this voluntary approach is the most efficient.
b. it would be more efficient if the electric company raised its rates for electricity at peak times.
c. it would be more efficient to have a lottery to decide who had to cut back their use of electricity at peak times.
d. it would be more efficient to force everyone to cut their usage of electricity by the same amount.
b
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The saying that "There's no such thing as a free lunch" refers to the
A) spillover principle. B) marginal principle. C) principle of opportunity cost. D) reality principle.
Under the cartel model, each firm produces where
a. marginal cost equals marginal revenue. b. price equals marginal cost. c. the average cost curve is at a minimum. d. price exceeds marginal cost by the greatest amount.
A firm in a competitive market currently produces and sells 500 doorknobs for a price of $10 per doorknob. Which of the following events would decrease the firm's average revenue?
a. The firm increases its output above 500 doorknobs. b. The firm decreases its output below 500 doorknobs. c. The market price of doorknobs rises above $10. d. The market price of doorknobs falls below $10.
An expansionary fiscal policy may be:
A. offset by lowering tax rates. B. reinforced by raising tax rates. C. partially offset by the crowding-out effect. D. reinforced by the crowding-out effect.