If the government wants a natural monopolist to achieve allocative efficiency, the government should
A. Subsidize the firm and require marginal cost pricing.
B. Use price ceilings so the firm will earn a normal profit.
C. Ensure that the firm produces at full capacity.
D. Regulate the firm so that it produces the output level at which economic profit is zero.
Answer: A
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According to the circular flow, the value of total output produced and total income
A) will be equal. B) should increase by the unanticipated rate of inflation. C) should differ by the value of intermediate goods. D) will always be increasing in a capitalist economy.
A nation has a comparative advantage in a good when it has a
A) higher opportunity cost of producing the good. B) tariff in place protecting the producers of the good. C) higher absolute cost of producing the good. D) lower absolute cost of producing the good. E) lower opportunity cost of producing the good.
Unemployment rates in the United States during the past 60 years
A) have remained between 4 and 6 percent. B) have risen and fallen in a range between approximately 10 and 25 percent. C) have risen and fallen in a range between approximately 4 and 10 percent. D) have fallen steadily from approximately 10 percent 40 years ago to near 2 percent today. E) have risen steadily and today are near all-time highs.
Non-activists are most interested in
A) the short-run level of unemployment and the effectiveness of monetary policy. B) the long-run consequences of policies. C) the effectiveness of monetary policy and the short-run inflation rate. D) the short-run rate of inflation and level of unemployment.