When a tax is imposed on sellers, producer surplus decreases but consumer surplus increases
a. True
b. False
Indicate whether the statement is true or false
False
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
In the alcohol industry, both wine and spirits are considered to be substitutes for beer
Indicate whether the statement is true or false
A market characterized by asymmetric information will have an equilibrium price if at that price
a. quantity demanded equals quantity supplied when all participants have the same information. b. quantity demanded equals quantity supplied given prevailing information levels. c. quantity demanded equals quantity supplied under perfect information. d. quantity demanded exceeds quantity supplied if suppliers are better informed (and vice versa).
Refer to the information provided in Figure 10.3 below to answer the question(s) that follow. 
Figure 10.3 Refer to Figure 10.3. The market wage is initially W0 and the firm is initially at Point A. Labor supply decreases from S0 to S1. The firm's MRPL curve will shift from MRPL at K1 to MRPL at K2 because
A. the supply of labor decreased, and therefore the productivity of labor decreased. B. the factor substitution effect will cause the firm to substitute capital for the higher-priced labor. C. the output effect led to a decrease in the demand for capital, which in turn decreased the productivity of labor. D. the firm is no longer maximizing profits.