We know the goal of a budget-constrained public enterprise
Indicate whether the statement is true or false
F Many possible goals might be pursued by a budget-constrained public enterprise, so for any one enterprise it is not easy to know its goal. It could try to control cost and pursue welfare through Ramsey pricing, or it could try to maximize revenue. The budget constraint is not a very confining limitation on its behavior.
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The interest rate thought to have the most important impact on aggregate demand is the
A) short-term interest rate. B) T-bill rate. C) rate on 90-day CDs. D) long-term interest rate.
Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when
a. neither person faces trade-offs. b. the frontiers are straight lines. c. the frontiers are bowed out. d. they choose not to trade with one another.
If the government imposes a maximum price that is above the equilibrium price,
A. demand will be greater than supply. B. quantity demanded will be less than quantity supplied. C. this maximum price will have no economic impact. D. the available supply will have to be rationed with a nonprice rationing mechanism.
If supply falls, what happens to equilibrium price and quantity?
What will be an ideal response?