Deflation is
A. a constant rate of inflation.
B. a slow-down in the rate of inflation.
C. zero inflation.
D. a decline in the average price level.
D. a decline in the average price level.
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The dynamic process of competition
a. provides profit-seeking sellers with little incentive to heed consumer preferences. b. was shown by Adam Smith to be a major source of economic inefficiency. c. provides consumers with alternative suppliers and thus a mechanism with which they can discipline sellers. d. will permit business decision makers to earn long-run economic profit unless they are regulated by government officials.
Suppose Hillary values a large order of French fries at $4 . Bill values a large order of French fries at $7 . The pre-tax price of a large order of French fries is $2 . The government imposes a "fat tax" of $3 on each large order of French fries, and the price rises to $5 . The deadweight loss from the tax is
a. $4, and the deadweight loss comes from both Hillary and Bill. b. $4, and the deadweight loss comes only from Hillary because she does not buy a large French fries after the tax. c. $2, and the deadweight loss comes from both Hillary and Bill. d. $2, and the deadweight loss comes only from Hillary because she does not buy a large French fries after the tax.
For a monopolist, when the output effect is greater than the price effect, marginal revenue is
a. positive. b. negative. c. zero. d. maximized.
Economists perceive a college applicant's grade point average and standardized test scores (such as SAT and ACT scores) to be rationing devices
Indicate whether the statement is true or false