If inflationary expectations decrease, the Phillips curve will
A. become vertical.
B. become upward sloping.
C. shift to the right.
D. shift to the left.
Answer: D
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Suppose that a government agency is trying to decide between two pollution reduction policy options. Under the permit option, 100 pollution permits would be sold, each allowing emission of one unit of pollution. Firms would be forced to shut down if they produced any units of pollution for which they did not hold a permit. Under the pollution tax option, firms would be taxed $250 for each unit of pollution emitted. The regulated firms all currently pollute and face varying costs of pollution reduction, though all face increasing marginal costs of pollution reduction. Suppose the regulators chose the permit policy instead of the tax policy. What might explain that decision?
A. Permit auctions raise more revenue than do taxes. B. The permit policy will reduce pollution by more than would the tax policy. C. The permit policy allows regulators to achieve reduction goals without having detailed knowledge about firms' abatement costs. D. Firms prefer the permit policy because it allows them to choose the least-costly reduction technology.
As a consumer you believe yourself to act rationally, optimally and self-interestedly. You like ice cream and value a pint at $7 . Usually you buy a pint each week at $4 . This week however, the price jumped to $5 a pint. What would you do?
a. buy the ice cream since the price is still below your maximum willingness to pay b. buy the ice cream since even at the new price it gives you a positive amount of consumer surplus c. not buy the ice-cream since the price is now higher d. both A&B
A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock. B. long-run demand shock. C. long-run supply shock. D. short-run demand shock.
The formula used for calculating the total profit of a monopolistic competitor is ________
A) (Price - Average Total Cost) × Quantity B) Price - Marginal Cost C) (Price- Average Total Cost) / Quantity D) (Price -Average variable cost)