Many economists argue that items such as food and clothing should be exempt from sales tax because low-income people spend a greater percentage of their income on these goods than do high-income individuals. This argument is motivated by concerns over
A. equity.
B. efficiency.
C. economic stability.
D. economic growth.
Answer: A
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Which of the following measures are government regulations to increase competition?
A) Government ends the ban on steel imports. B) Government shortens the term of the patent for a drug. C) Government subsidizes firms to enter energy market. D) All of above.
An individual has preferences consistent with standard expected utility theory. They have utility function U(x) over wealth x. Starting with initial wealth of $10,000, the person is then faced with two choice problems. The first involves a choice between (A) no gamble and (B) a gamble with an equal chance of winning $1,800 and losing $1,000 . The second choice problem, the person first has $1,000
taken away (resulting in the adjustment of the reference point). The choice is then between (C) being given back $1,000 for sure and (D) an equal chance of winning $2,800 or nothing. What can be said about the choices the person would make? a. The person would never choose both A and D. b. The person would never choose both A and C. c. The person would choose A and D. d. The person would choose A and C.
Average total cost:
A. increases when output levels are low, then decreases as output decreases. B. is maximized when it equals marginal cost. C. is minimized when it equals average variable cost. D. decreases when output levels are low, then increases as output increases.
To maximize profits, a perfectly competitive firm should produce where marginal:
A. cost equals marginal revenue. B. revenue exceeds marginal cost. C. cost equals total revenue. D. cost exceeds marginal revenue.