In the short run, if price is below AC, maximizing profits really means minimizing total losses
a. True
b. False
Indicate whether the statement is true or false
True
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You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) two people with the same total income would pay taxes of the same amount, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following tax systems could achieve both goals?
a. a lump-sum tax b. a regressive tax c. a progressive tax d. a proportional tax
The change in consumption spending divided by the change in disposable income provides the ______.
a. change in total consumption b. marginal propensity to consume c. total purchases from the multiplier effect d. change in overall tax revenue
When economists want to obtain a measure of the responsiveness of quantity demanded to changes in price, they use
A) the slope of the demand curve. B) the price elasticity of demand. C) the unit change in quantity demanded. D) the cross-price elasticity of demand.
Suppose there are two factories on a river, and both need clean water for their production processes. The upstream factory takes in clean water and dumps dirty water back into the river. The downstream firm must clean up the water it gets from the river before using it. In this situation
A. the internal costs of the upstream factory are externalized by the downstream factory, which then passes them on to its customers. B. the social costs are greater than the private costs for the upstream firm, while the social costs are less than the private costs for the downstream firm. C. the private costs of the downstream factory are more than the private costs of the upstream factory, but for both factories private costs and social costs are the same. D. the upstream factory's private costs are less than its social costs, and its external costs are borne by the downstream factory.