Figure 4-24
Refer to . The amount of deadweight loss associated with the tax is equal to
a.
P3 A C P1.
b.
A B C.
c.
P2 A D P3.
d.
P1 D C P2.
b
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Long run average cost curves are downward sloping for increasing returns to scale production technologies.
Answer the following statement true (T) or false (F)
U.S. investment is financed from
A) private saving, government budget surpluses, and borrowing from the rest of the world. B) private saving, government budget deficits, and borrowing from the rest of the world. C) private borrowing, government budget deficits, and lending to the rest of the world. D) private saving and borrowing from the rest of the world only.
Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 10,000 units
A) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low. B) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low. C) producers should lower the price to $1 in order to sell the quantity demanded of 10,000. D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high.
As a result of the existence of automatic stabilizers
A. the government budget deficit will always increase during a period of economic recession. B. the economy will always tend to move toward a full-employment equilibrium. C. the government budget deficit will always increase during a period of economic expansion. D. the business cycle will no longer exist. E. None of the choices are correct.