How do monopoly prices and quantities produced differ from perfectly competitive outcomes, all other things equal?
A. Monopoly prices and quantities are both lower than competitive outcomes.
B. Monopoly prices and quantities are both higher than competitive outcomes.
C. Monopoly prices are lower than competitive prices but monopoly quantities are higher than competitive quantities.
D. Monopoly prices are higher than competitive prices but monopoly quantities are lower than competitive quantities.
Answer: D
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The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is
A) 5% higher in year 2 than in year 1. B) 105% higher in year 1 than in year 2. C) 105% higher in year 2 than in year 1. D) 5% higher in year 1 than in year 2.
An income tax to pay for national defense can approximate a _____ if there is a close relationship between income and _____
a. user charge; wealth b. unit tax; wealth c. user charge; consumption d. sales tax; consumption
Imagine that the U.S. economy is in equilibrium at full employment without inflation where national income is at $6,700 billion. The MPC = 0.8 . If massive flooding along the Mississippi River leads Congress to approve a spending package of $10 billion to aid flood victims, the government must also take which of the following actions to keep the economy in equilibrium at full employment without
inflation? a. increase taxes by $10 billion b. decrease taxes by $10 billion c. cut other government spending programs by $7.5 billion d. increase taxes by $12.5 billion e. decrease taxes by $12.5 billion
In the markets for factors of production in the circular-flow diagram,
a. households provide firms with labor, land, and capital. b. households provide firms with savings for investment. c. firms provide households with goods and services. d. firms provide households with revenue.