Alan runs the only taxi service in town. Whenever he raises his fares above $.30 per mile, other taxi firms enter and compete with him to drive his fares back to $.30 per mile. Describe what kind of market Alan is operating in and if it is plausible that Alan might set his fare so as to achieve efficiency? Explain
Alan is operating in a contestable market. Entry is easy, and so, whenever competitors detect a positive
economic profit being made, they enter. It is plausible that Alan will set his fares at the competitive price
level, and so will achieve efficiency. This is because the threat of entry will force him to behave
competitively.
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Refer to the above table. The table gives the combinations of real disposable income and real consumption for a college student for a year. What is the value of the average propensity to consume when real disposable income equals $14,000?
A) 0.91 B) 1.1 C) 0.09 D) 0.7
On an afternoon that a class meets, you could alternatively study for an exam that will take place in another class the next morning, go to a movie with a friend, or, most desirable to you at present, take a nap
The opportunity cost of attending the afternoon class is A) forgoing the nap. B) missing seeing the movie with your friend. C) giving up the time to study for the next morning's exam. D) being unable to engage in all three of the above activities.
During the 1990s, the nominal price of crude oil ____ and the real price ____
a. leveled off; fell b. fell; leveled off c. rose; fell d. fell; rose
Governments can increase the consumption of a product that creates positive externalities by
A) subsidizing the production of the product so that the supply is increased and market price is reduced. B) taxing the production and consumption of the product. C) convincing everyone to consume the product. D) assigning property rights to the producers of the product.