The above figure shows the reaction functions for two pizza shops in a small isolated town. The Stackelberg leader will produce
A) 25 pizzas.
B) 50 pizzas.
C) 66.7 pizzas.
D) 100 pizzas.
D
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If the government wishes to maximize its tax revenue, it should
A) recognize that too high of a tax rate can decrease the tax base. B) engage in static tax analysis. C) recognize that an increase in the tax rate will lead to an increase in tax revenues. D) use only flat taxes.
The income effect of a lower price for good A
a. invariably leads a consumer to buy more of good A, because the combination of unchanged money income and lower price raises that consumer's real income or purchasing power b. invariably leads a consumer to buy less of good A because the combination of unchanged money income and lower price encourages that consumer to buy more of other goods c. may lead to a larger, smaller, or even an unchanged quantity of good A demanded; it all depends on the nature of the good itself d. creates a change in the good's relative price and, therefore, causes the consumer to substitute good A in place of other goods e. causes a parallel outward shift of the budget line, enabling the consumer to buy more of all goods than before
The average-fixed-cost curve
a. is constant. b. is always decreasing. c. intersects marginal cost at the minimum of average fixed cost. d. intersects marginal cost at the minimum of marginal cost.
Empirical evidence shows that in response to the 2008 and 2009 tax rebates, consumers spent 50% to 90% of the amounts they received. This suggests that
A. Okun's law holds. B. budget constraints are not binding. C. Ricardian equivalence does not hold. D. people do not understand economics.