The U.S. government is offering a decrease in taxes to citizens who install solar panels on their homes. Using economic terms, how would you describe this incentive?
A. Financial and positive
B. Non-financial and positive
C. Non-financial and negative
D. Financial and perverse
A. Financial and positive
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The figure above shows Sam's budget line. Which of the following would result in Sam's budget line rotating outward and not changing its horizontal intercept?
A) a fall in the price of a pound of coffee B) a rise in the price of a pound of coffee C) a fall in the price of a gallon of gasoline D) a rise in the price of a gallon of gasoline
What is the "omitted variable" problem in determining cause and effect?
A) It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect. B) It is a problem that arises when a significant variable is not given enough weight in an economic experiment leading to skewed conclusions about cause and effect. C) It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic experiment leading to false conclusions about cause and effect. D) It is a problem that arises when an insignificant variable is given too much weight in an economic analysis leading to skewed conclusions about cause and effect.
Balin's Burger Barn operates in a perfectly competitive market. Balin's is currently earning economic profits of $20,000 per year. Based on this information, we can conclude that
A) Balin's is operating in the short run, but not the long run. B) Balin's is operating in the long run. C) Balin's profits will discourage new firms from entering. D) Balin's will increase its market price over the counting months.
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher