Market failures
A) prevent the price system from attaining economic efficiency.
B) result in quantities and prices that are socially desirable.
C) strengthen economic efficiency by forcing unprofitable firms to close.
D) weaken the argument for government intervention in the economy.
A
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
Firms are considered to be price searchers, as opposed to price takers, in all of the following market types except:
A) perfect competition. B) monopolistic competition. C) oligopoly. D) monopoly.
Critics of government frequently assert that special interest groups favor transfer policies rather than economic growth policies
Indicate whether the statement is true or false
If a firm enjoys economies of scale, _____.
(A) Its average total cost will increase as production increases. (B) Its total costs will decrease as production increases. (C) Its average total cost will decrease as production increases. (D) Its marginal revenue will increase as production increases.