What is a budget line? What does its slope indicate?
What will be an ideal response?
The budget line for a household graphically represents all possible combinations of two commodities that it can purchase, given the prices of the commodities and some fixed amount of money at its disposal. Its slope is the amount of one commodity that the market requires an individual to give up to obtain one additional unit of another commodity without any change in the amount of money spent.
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Indemnity coverage does not include:
a. compensation toward the cost of medical services in the event of illness. b. compensation toward the cost of medical services for routine health issues. c. compensation toward the cost of medical services in the event of injury. d. both b. and c.
The typical monopolistically competitive firm earns no economic profit in the long run, regardless of whether or not it advertises
a. True b. False
If the percentage change in quantity demanded is greater (in absolute value) than the percentage change in price, then demand
a. determines supply b. is indeterminate c. is elastic d. is inelastic e. is unit elastic