Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2.
B. P3 and Y1.
C. P2 and Y2.
D. P2 and Y3.
Answer: D
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If the state uses a uniform standard, show that such a ruling would not be cost-effective. Which firm should be abating more, and which firm should be abating less?
Consider the environmental problem created by two paint companies that release chromium wastes into a nearby stream. The state authorities set a standard for the waterway that requires a combined abatement level (A) for chromium of 15 units. Suppose that the two firms, firm 1 and firm 2, face the following marginal abatement cost equations: MAC1 = 3.2A1 and MAC2 = 0.8A2, where costs are measured in thousands of dollars.
Fiona's hourly wage increases from $8 to $10 . Which of the following describes a consequence of the increase in Fiona's wage?
a. The opportunity cost of Fiona's leisure time has decreased. b. Fiona may choose to work fewer hours due to the increase in her wage. c. If Fiona's labor supply curve is upward sloping, she will choose to work fewer hours. d. Both a and b are correct.
Statistical discrimination occurs when:
A. individuals are judged on the basis of the groups to which they belong. B. statistics are used to make employment decisions. C. firms have perfect information about each potential buyer. D. individuals are judged solely on the basis of their personal characteristics.
According to Adam Smith, a country should produce all goods at home that it can, even if it could buy those goods at a lower cost from other countries t/f
a. true b. false