"In the long run, a perfectly competitive firm's average total cost is always below the market clearing price." Agree or disagree? Why?
What will be an ideal response?
Disagree. In the long run, a perfectly competitive firm produces at an output rate at which the market clearing price equals short-run minimum average total cost and long-run minimum average total cost. If the firm's average total cost is below the market clearing price, its profits will lead to firm entry into the industry. As a result of firm entry, the market clearing price will decline. This process will continue until the market clearing price equals the firm's average total cost.
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Describe how a Clarke tax is designed and explain how it leads a person to correctly reveal his preferences for a public good.
What will be an ideal response?
The Smoot-Hawley Act introduced
A) opportunities for expanding U.S. foreign trade. B) the highest tariffs set by the United States in the last 90 years. C) a framework promoting international free trade. D) revenue tariffs as a major source of U.S. government revenues.
State and local property taxes are regressive
a. True b. False Indicate whether the statement is true or false
Which of the following observations is true?
a. Increase in taxes shifts the consumption schedule upward. b. Tax reductions increase equilibrium GDP. c. Taxes reduce total spending directly. d. Taxes do not have a multiplier effect on equilibrium GDP.