The classical model uses the assumption that
A) all wages and prices are flexible.
B) interest rates are not flexible.
C) monopoly is widespread in the economy.
D) economic markets are fragile and have no tendency to move towards an equilibrium.
A
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As Americans have become more health conscious, rules about food labels have become more complex and stringent. This is an example of government acting as
A. referee. B. redistributor. C. taxer. D. defender.
The goal of a perfectly competitive firm is to maximize its
A) normal profit. B) revenue. C) output. D) economic profit.
Sophie pays Sky $50 to mow her lawn every week. When the government levies a mowing tax of $10 on Sky, he raises his price to $60. Sophie continues to hire him at the higher price. What is the change in producer surplus, change in consumer surplus, and deadweight loss?
a. $0, $0, $10 b. +$10, ?$10, $0 c. $0, ?$10, $0 d. +$10, ?$10, $10
The income elasticity of demand for food is roughly 1. A consumer's monthly income is $2,000, of which 20 percent is spent on food. If the income of this consumer doubles, the amount she'll spend on food will be:
A. $400 per month B. $500 per month C. $800 per month D. $1000 per month