People increase their labor supply in response to a temporary increase in government purchases because
A. higher spending today will lead to higher spending in the future, as well.
B. interest rates will rise, causing a substitution effect.
C. they need to work more to keep up with their neighbors.
D. current or future taxes will increase, making them financially worse off.
Answer: D
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Refer to the accompanying figure. Which of the following is true?
A. Points B, C, E and F are efficient. B. Point F is the most efficient because medical care is the highest there. C. Point D is efficient because it requires using the fewest resources. D. Point A is efficient because it is farthest from the origin.
If the government imposes a quantity restriction on how many shoes can be imported into a country, and the total quantity is below the market equilibrium quantity:
A. total surplus in the market increases. B. total surplus in the market decreases. C. total surplus in the market does not change. D. total surplus may increase or decrease, depending on whether costs are increasing or decreasing in production.
The purpose of making assumptions in an economic model is to
A) force the model to yield the correct answer. B) minimize the amount of work an economist must do. C) simplify the model while keeping important details. D) express the relationship mathematically.
In this market, economists would call a government-set minimum price of $50 a:
A. price ceiling.
B. price floor.
C. equilibrium price.
D. fair price.