In a perfectly competitive market,
a. each firm faces a perfectly elastic supply curve
b. each consumer faces a perfect elastic demand curve
c. the market sums up the buying and selling preferences and determines the market price
d. the market price is determined by firms and the market quantity is determined by consumers
e. price equals marginal cost equals average total cost in the short run
C
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In the market for land as a resource, the demand curve is elastic while the supply curve is perfectly inelastic. Identify the underlying assumption
a. There are limited ways in which land can be used as a resource. b. Land as an input has large number of substitutes. c. There is a fixed supply of land. d. Land includes all immovable assets. e. The productivity of land improves over time.
Which of the following investments is part of a positional arms race?
A. Playing golf for fun B. Watching your friend train for a soccer game C. Studying hard for your economics exam because your professor grades on a curve D. Renting movies for the weekend
Answer the following statement(s) true (T) or false (F)
1. Small, medium, and large taxes all affect deadweight loss equally. 2. A large increase in tax can reduce the quantity exchanged to the point where there is very little tax revenue raised. 3. Subsidies create welfare gains. 4. Price ceilings create deadweight losses. 5. Deficiency payment programs are designed to help poor teachers.
Assume that the price overestimates the value that society places on the flu vaccine. If firms produce where P = MC, firms will be producing ________ the socially efficient amount of flu vaccine.
A. more than B. less than C. exactly D. sometimes more than and sometimes less than