When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease.
B. prices, causing them to definitely rise.
C. output, causing it to definitely increase.
D. prices, causing them to definitely fall.
Answer: A
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Refer to Figure 2-4. A movement from ________ could occur because of an influx of immigrant labor
A) W to X B) X to Y C) X to W D) W to V
Government regulations designed to reduce the moral hazard problem include
A) laws that force firms to adhere to standard accounting principles. B) light sentences for those who commit the fraud of hiding and stealing profits. C) state verification subsidies. D) state licensing restrictions.
Price discrimination is welfare reducing
A) False, price discrimination can increase the coverage of a market thereby increasing welfare. B) False, price discrimination limits the coverage of a market thereby increasing welfare. C) True, price discrimination limits the coverage of a market thereby increasing welfare. D) True, price discrimination can increase the coverage of a market thereby increasing welfare.
Deadweight loss from monopoly power is expressed on a graph as the area between the
A) competitive price and the average revenue curve bounded by the quantities produced by the competitive and monopoly markets. B) competitive price line and the marginal cost curve bounded by the quantities produced by competitive and monopoly markets. C) competitive price line and the monopoly price line bounded by zero output and the output chosen by the monopolist. D) average revenue curve and the marginal cost curve bounded by the quantities produced by competitive and monopoly markets.