Refer to the above figure. When the price in the market is $4, economic profits will equal
A. $200.
B. $400.
C. $300.
D. $100.
Answer: D
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A price ceiling imposed below the equilibrium price ______
A. creates a black market in which the price might equal or exceed the equilibrium price B. creates a black market in which the price equals the price ceiling C. leads to increased search activity, which reduces the shortage of the good D. increases the demand for the good, which makes the shortage even larger
Welfare benefits
a. may do of all of the following b. may discourage poor people from taking jobs c. may cause job skills to deteriorate d. take the form of cash or in-kind transfers e. allow increased consumption by many poor children
Suppose Japan has a comparative advantage over Canada in the production of DVDs. This means that Japan:
a. needs fewer resources to produce DVDS than does Canada. b. has better technology for producing DVDs than does Canada. c. has a lower opportunity cost of DVD production than does Canada. d. can produce more DVDs in a given period of time than can Canada.
What causes the production possibility curve to be bowed out?
What will be an ideal response?