Who was the economist who first proposed that governments use taxes and subsidies to correct for externalities?
A) Ronald Coase
B) A. C. Pigou
C) Adam Smith
D) David Hume
Answer: B
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A single-price monopolist will produce the output at which ________
A) marginal revenue equals marginal cost B) demand is perfectly inelastic C) marginal revenue is zero D) demand is inelastic but not perfectly inelastic
Due to increased competition, Hit-Hard, a baseball bat manufacturer, decreased the price of its product. This was followed by a decrease in price by all the other manufacturers. Which of the following will be an impact of this price change in the market for baseball bats. a. The quantity supplied of baseball bats will increase. b. The quantity supplied of baseball bats will decrease. c. The
supply of baseball bats will increase. d. The supply of baseball bats will decrease.
Illustrate using a graph how the economy you depicted in (a) will adjust in the long run. On the graph identify the long run price level and the long run level of aggregate output. Explain verbally your results. In your answer make sure you comment on what is happening to wages and prices during this long run adjustment.
The long-run Phillips curve indicates that
A) potential GDP can never be achieved. B) there is no way to control the inflation rate in the long run. C) any inflation rate is possible at the natural unemployment rate. D) any unemployment rate is possible at the natural inflation rate. E) there is a tradeoff between the inflation rate and the unemployment rate in the long-run.