The theory of competitive pricing
a. is an imperfect model of market performance.
b. is a set of ideal conditions and outcomes.
c. is ineffective when large swings in price occur.
d. demonstrates the need for subsidies and price ceilings.
Ans: b. is a set of ideal conditions and outcomes.
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Refer to Labor Demand and Labor Supply. What does area A + B + C represent?
The following questions refer to the accompanying diagram, which shows an industry's labor demand and labor supply. Labor and capital are the only factors used by the industry. The industry hires L units of labor at a wage of PL.
a. The industry's total revenue.
b. The rent earned by the industry's laborers.
c. The total wages paid to the industry's laborers.
d. The rent earned by the industry's capital.
A new technology is discovered which results in all new cars producing 50 percent less pollution. Which of the following is true?
A) Real GDP increases because the air is cleaner, but nominal GDP does not change since air is free. B) GDP will increase to reflect the fact that the air we breathe is cleaner. C) GDP will increase if there is an increase in the production cost and price of the car. D) GDP increases anytime pollution is reduced. E) GDP will decrease.
According to the H-S definition of income, employer contributions are excluded from money income.
A. True B. False C. Uncertain
A change in the interest rate does not affect the quantity of money supplied. This means that:
a. the money supply curve is negatively sloped. b. the money supply curve is vertical. c. the money supply curve is horizontal. d. the money supply curve is a 45 degree line drawn from the origin. e. the money supply curve is kinked.