Refer to Figure 4-10. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What is the area representing producer surplus after the imposition of the price floor?
A) A B) B + D + F C) B + C + D + E + F D) C + E
B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Higher prices
A. are always against the public interest. B. may sometimes serve the public interest. C. should never be allowed. D. occur automatically for abundant goods.
Keeping landing fees low at airports during the “peak” hours
A. perpetuates congestion during those hours. B. is politically unpopular. C. contributes to efficient allocation of airport facilities. D. would lessen the problem of delayed flight landings.
Drug companies tend to attribute higher drug prices on
A. the low percentage of attempts that actually result in revenue producing drugs. B. long testing processes. C. the low percentage of attempts that actually result in revenue producing drugs and long testing processes. D. doctors distributing too many free samples.