The figure above shows the market for private elementary school education in Chicago. There is no external cost of private elementary education. If the government does not intervene in this market, the deadweight loss equals
A) 0.
B) $800,000.
C) $1,600,000.
D) more than $1,600,000.
E) more than $800,000 and less than $1,600,000.
B
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Elaine’s firm is in a perfectly competitive industry. Why doesn’t Elaine try to sell more of her product by lowering its price below the market price?
a. Her demand curve is not elastic. b. Doing so would be considered unethical price chiseling. c. Her competitors would not allow it. d. She can sell all she wants at the market price.
Most economists agree that modest inflation is desirable over zero inflation because:
A. it helps firms to more easily adjust real wages. B. it allows a margin of error for those deciding on the money supply. C. it allows the Fed to more easily engage in expansionary monetary policy. D. All of these statements are true.
Which of the following are key components of a contractionary money policy?
a. Interest rates rise; equilibrium money demanded increases; decrease in aggregate demand. b. Interest rates rise; equilibrium money demanded decreases; decrease in aggregate demand. c. Interest rates fall; equilibrium money demanded increases; decrease in aggregate demand. d. Interest rates fall; equilibrium money demanded increases; increase in aggregate demand.
Economists distinguish among the immediate period, the short run, and the long run by noting that
A. supply is most elastic in the short run and perfectly inelastic in the immediate period. B. supply is most elastic in the short run and perfectly inelastic in the long run. C. demand is most elastic in the long run and perfectly inelastic in the immediate period. D. supply is most elastic in the long run and perfectly inelastic in the immediate period.