If cyclical unemployment is zero, the economy is
A. Outside the production possibilities curve.
B. On the production possibilities curve that shifts inward.
C. On the fixed production possibilities curve.
D. Inside the production possibilities curve.
Answer: C
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Suppose the market demand function for ice cream is Qd = 10 - 2P and the market supply function for ice cream is Qs = 4P - 2, both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.50 tax on each gallon of ice cream. The deadweight loss due to the tax is:
A. $944,444. B. $2.83 million. C. $1.67 million. D. $1.89 million.
When a firm's marginal productivity declines as output increases, then the firm is experiencing
a. Diminishing returns to scale b. Constant returns to scale c. Increasing returns to scale d. Increasing marginal product
When estimating GDP, changes in the level of inventory are calculated because:
a. it indicates the level of employment in the economy. b. it provides information about a firm's expectations. c. it is a good indicator of the competitiveness of the economy. d. it shows the level of business spending by firms. e. it determines the value of goods produced in a year but not sold in that year.
Excise taxes include sales taxes, unit taxes, and
a. property taxes b. estate taxes c. customs duties d. inheritance taxes e. poll taxes