“Plowback” represents a portion of corporate profits that are used to
A. invest in future activities of the corporation.
B. advertise the company’s product.
C. buy back bonds (reduce debt).
D. pay owners for the use of their capital.
Answer: A
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In a production possibilities frontier diagram, the attainable production points are shown as
A) the points inside and the points on the production possibilities frontier. B) only the points inside the production possibilities frontier. C) any of the production points. D) only the points beyond the production possibilities frontier. E) only the points on the production possibilities frontier.
In the long run, a leftward shift of the aggregate demand curve will lead to a(n):
a. increase in equilibrium output but will not change the price level in an economy. b. increase in the price level as well as the equilibrium output in an economy. c. decrease in the price level but will leave the equilibrium output unchanged in an economy. d. increase in the price level but will leave the equilibrium output unchanged in an economy. e. decrease in the price level as well as the equilibrium output in an economy.
Pollution taxes are more efficient in cleaning up the environment than direct controls. What role is there for direct controls?
a. They are useful standby mechanisms. b. They are useful if it is decided to prohibit the substance altogether. c. They are useful where dependable metering devices are not available or prohibitively costly to install. d. All of the above are true.
Suppose, a regulatory agency overseeing a natural monopoly wants to secure consumers a low price without subsidy, while at the same time sustain the firm at zero economic profit. What can the agency do?
a. Set price equal to marginal cost. b. Set marginal revenue equal to marginal cost, and set price based on the demand curve. c. Set price equal to zero. d. Set price equal to average cost.