A competitive industry consists of 100 firms. The short-run marginal cost curve for each firm is given by MC = 200 + .3Q. The demand curve faced by the industry is given as P = 400 - .1Q. What is the producer and consumer surplus in the entire market?
What will be an ideal response?
Producer surplus will be 37,500 [(150 × 500)/2] and consumer surplus will be 12,500. [(50 × 500)/2].
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According to the law of increasing costs, as the United States expends more of its resources on reducing air pollution,
A. the quantity of other goods that must be given up for further reductions in air pollution will decrease. B. the quantity of other goods that must be given up for further reductions in air pollution will increase. C. the social cost of additional air pollution will increase. D. there will be no change in the marginal cost of reducing air pollution.
Answer the following statements true (T) or false (F)
1. Government intervention in the U.S. economy includes legislation such as antitrust laws, labor laws, and safety regulations. 2. Full employment is considered to have been achieved only when everybody in the economy has a job. 3. An economic growth rate of 3 percent would be considered unhealthy for the U.S. economy. 4. A stable unemployment rate requires that the U.S. economy grow each year in order to absorb new workers who enter the labor force.
Because the personal income tax is an automatic stabilizer,
A. inflationary gaps are impossible. B. the budget deficit grows during a recession. C. the deficit needed to cure a recessionary gap increases. D. the structural deficit grows during a recession. E. all of the above are correct.
Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?
A) A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year, and the actual rate of inflation ends up being 7 percent per year. B) A worker receives a raise in salary that is less than the rate of inflation, because management under-predicted inflation. C) Firms have to hire an extra worker to change prices in its store because of inflation. D) A bank collects a lower amount of interest from a loan because inflation was under-predicted.