Microeconomics includes the study of
A) how countries decide to fund their budget deficits.
B) the choices that individuals and businesses make.
C) how a nation promotes economic growth.
D) the effect on the national economy of the choices that individuals make.
E) the overall amount of production within the economy.
B
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Suppose that a government agency is trying to decide between two pollution reduction policy options. Under the permit option, 100 pollution permits would be sold, each allowing emission of one unit of pollution. Firms would be forced to shut down if they produced any units of pollution for which they did not hold a permit. Under the pollution tax option, firms would be taxed $250 for each unit of pollution emitted. The regulated firms all currently pollute and face varying costs of pollution reduction, though all face increasing marginal costs of pollution reduction. Suppose the regulators chose the permit policy instead of the tax policy. What might explain that decision?
A. Permit auctions raise more revenue than do taxes. B. The permit policy will reduce pollution by more than would the tax policy. C. The permit policy allows regulators to achieve reduction goals without having detailed knowledge about firms' abatement costs. D. Firms prefer the permit policy because it allows them to choose the least-costly reduction technology.
If a middle-eastern war reduced the quantity of crude petroleum available for export to Japan and the United States by 40%, and the U.S. government responded by imposing price ceilings on petroleum,
A) more petroleum would be available for Japanese users. B) the demand for crude petroleum in the U.S. would increase. C) the demand for natural gas in the U.S. would decline. D) the price of petroleum would rise even higher in Japan. E) all of the above would be likely to result.
Personal income taxes
a. make recessions and inflationary episodes more severe b. make recessions and inflationary episodes less severe c. make recessions more severe and inflationary episodes less severe d. make recessions less severe and inflationary episodes more severe e. have no effect on the severity of recessions and inflationary episodes
Which of the following is an example of an organization using marginal analysis?
A. A hotel manager calculating the average cost per guest for the past year. B. A farmer hoping for rain. C. A government official considering what effect an increase in military goods production will have on the production of consumer goods. D. A business calculating economic profits.