A liquidity trap occurs when the
a. LM curve is steep.
b. LM curve is vertical.
c. LM curve is relatively flat.
d. IS curve is flat.
C
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Economic growth is shown on the production possibilities frontier as
A) a movement from one point on the PPF to another. B) an outward shift in the PPF. C) an inward shift in the PPF. D) the curvature of the PPF.
Explain the difference between marginal cost and marginal benefit
What will be an ideal response?
Under a binding price ceiling, what does the change in consumer surplus represent?
A) The gain in surplus for those buyers who can still purchase the product at the lower price. B) The loss in surplus for those buyers who previously purchased some units of the good at the higher price, but these units are no longer produced at the lower price. C) The loss in surplus for those buyers who would like the purchase the excess demand created by the price ceiling policy. D) Both A and B are correct. E) Both A and C are correct.
Suppose the accompanying figure illustrates the demand curve facing a monopolist.
Suppose this firm maximizes its profits by charging a price of $8 per unit. This implies that the firm's:
A. marginal cost is less than $8. B. marginal cost is $0. C. average total cost is $8. D. marginal cost is $8.