Refer to Figure 34.1. Suppose the production possibilities curve PP2 represents the goods and services produced in the U.S. economy. If the current welfare system discourages people from seeking work, and laws change so that more people receive welfare benefits, the most likely result would be
A. No change from PP2.
B. A shift from PP2 to PP1.
C. A shift from PP2 to PP3.
D. A movement from point C to point PP2.
Answer: B
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Normative statements i. describe how the world is. ii. describe how the world ought to be. iii. depend on people's values and cannot be tested
A) i only B) ii only C) iii only D) ii and iii E) i and iii
We know that in the long run, perfectly competitive firms produce where MC = MR and end up making zero economic profit. The profit-maximizing output level for a monopolist is where
a. price is maximized b. quantity is maximized c. ATC curve is minimized d. maximum efficiency is achieved e. MR = MC
An import quota does which of the following?
A. Decreases the price of the imported good to the consumer. B. Increases the price of the domestic good to the consumer. C. Redistributes income from the domestic producer to the protected domestic exporter. D. Decreases the price received by the foreign producer.
In Figure 5.3, the most inelastic supply curve:
A. is Supply1. B. is Supply2. C. is Supply3. D. cannot be determined.