In a market economy, supply and demand are important because they
a. play a critical role in the allocation of the economy's scarce resources.
b. determine how much of each good gets produced.
c. can be used to predict the impact on the economy of various events and policies.
d. All of the above are correct.
d
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Monopolists are criticized because they are inefficient. What is meant by this statement?
a. Monopolists charge too high a price. b. Monopolists don't innovate enough to control pollution. c. Monopolists produce a large quantity of waste. d. Monopolists usually don't produce at the minimum of the ATC. e. Monopolists could use their resources better elsewhere.
A buyer's consumer surplus on a unit of a good is its value to that buyer minus what the buyer actually pays for it
a. True b. False
If a government spends $20 billion on new bridges that have an expected life of 20 years, the expenditures would:
a. Increase government spending and government expenses by the full $20 billion even though a business would expense them over the 20-year period. b. Not change government spending and therefore would not change the government deficit because they are capital expenditures. c. Increase total government spending by the full amount (i.e., $20 billion), but only $1 billion of it would be considered part of the budget deficit because the $20 billion is amortized over the 20 years. d. Initially increase the budget deficit by an amount equal to $20 billion, but only $1 billion of it would be considered part of the government spending because the $20 billion is amortized over the 20 years.
A firm will increase its production when
a. its marginal revenue rises. b. its marginal cost rises. c. its fixed costs fall. d. the demand for its product falls.