What is the theory of Second Best?
What will be an ideal response?
The principal of the second best tells us that when an economy suffers from multiple distortions, the removal of only a few may make matters worse, not better.
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Describe and explain the policy irrelevance proposition
What will be an ideal response?
A large oligopolistic firm that unilaterally makes changes in price which competitors tend to follow is known as a: a. price leader
b. price maker. c. dominant strategy firm. d. cartel leader.
The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.
Figure 17-11
Refer to Figure 17-11. Government revenue raised by the tariff is represented by the area
a.
E.
b.
B + E.
c.
D + E + F.
d.
B + D + E + F.
Leontief used an input-output table in order to test the
A) classical theory. B) the Heckscher-Ohlin theory. C) the Linder hypothesis. D) All of the above.