If TR equals TC, the a firm
A. earns a profit of $0.
B. suffers a loss.
C. earns a positive profit.
D. shuts down.
Answer: A
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If the price elasticity of supply is 3, supply is:
A. unaffected by price changes. B. inelastic. C. unit elastic. D. elastic.
A problem encountered when implementing an "infant industry" tariff is that
A) domestic consumers will purchase the foreign good regardless of the tariff. B) the industry may never "mature." C) most industries require tariff protection when they are mature. D) the tariff may hurt the industry's domestic sales. E) the tariffs fail to protect the domestic producers.
Which of the following is an appropriate fiscal policy prescription that addresses the inflation that occurs when the economy is above potential GDP?
a. Decreasing taxes to protect consumers from the effects of inflation b. Increasing taxes to reduce aggregate demand c. Increasing government spending to provide some of the goods that consumers can no longer afford at the higher prices d. Decreasing government spending to cause a decrease in the demand for money e. Increasing transfer payments to poor people, who are hurt the most by the inflation
The classic resource study of Barnett and Morse found that
a. resource costs have been rising at such a rate that, within fifty years, the prices of most natural resources will be exorbitant. b. the current proved reserves of most minerals are becoming perilously low. c. resource prices declined between 1870 and 1920, but since 1920 the relative price of natural resources has been increasing at an annual rate of approximately 3.5 percent. d. technology and developing substitutes outran our use of scarce natural resources during the last century, so that relative resource prices have declined.