How does a decrease in government spending affect the aggregate expenditure line?
A) It shifts the aggregate expenditure line upward.
B) It shifts the aggregate expenditure line downward.
C) It increases the slope of the aggregate expenditure line.
D) It decreases the slope of the aggregate expenditure line.
B) It shifts the aggregate expenditure line downward.
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According to the Weak Coase Theorem, in the absence of transactions costs, the assignment of property rights has no effect on
a. damages paid by liable parties. b. the distribution of income. c. the allocation of resources. d. economic efficiency.
If the government should decide to legalize marijuana, all other things remaining the same, we should expect to see
A) a decrease in the price of marijuana. B) an increase in the price of marijuana. C) a decrease in the demand for marijuana. D) an increase in the use of imported versus domestic marijuana.
Suppose a perfectly competitive firm can produce 20,000 bushels of corn a year at an output at which marginal cost equals marginal revenue. The market price of corn per bushel is $1.00
The firm's total costs per year are $50,000 and fixed costs per year are $25,000. In the short run, this firm should A) shut down. B) continue producing until the price of corn increases. C) produce 20,000 bushels of corn because, although they are losing money, they are losing less than if they shut down. D) produce 40,000 bushels to try to increase economic profit.
The way we know what commodities are relatively scarce or abundant is through
A) transaction costs. B) prices. C) price ceilings. D) price floors.