Refer to the graph shown. Destruction of some of the resources necessary to produce both guns and butter would result in what movement?
A. From X to Y to X to Z in diagram b.
B. From C to D to A to B in diagram a.
C. From A to B to C to D in diagram a.
D. From X to Z to X to Y in diagram b.
Answer: B
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A surplus occurs when the market price is lower than the equilibrium price
Indicate whether the statement is true or false
An externality is an event that
A. is external to economics. B. always brings harm to someone in the economy. C. is incidental to some market activity. D. harms the economy as a whole rather than a particular person.
Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product.
Suppose Quick Buck and Pushy Sales decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Quick Buck cheats by reducing its price to $1 and Pushy Sales matches the price cut, then if consumers are evenly split between the two firms, what will be Quick Buck's economic profit?
A. $3,000 B. $2,000 C. $1,000 D. $1,500
Which of the following statements is false?
A. The production possibilities curve shows the combinations of goods that can be consumed by a nation before trade begins. B. The production possibilities curve shows the combinations of goods that can be consumed by a nation after trade and specialization begins. C. The production possibilities curve shows the combinations of goods that can be produced by a nation before trading begins. D. The production possibilities curve shows the combinations of goods that can be produced by a nation after trade and specialization begins.