In a survey of consumers, Daniel Kahneman, Jack Knetsch and Richard Thaler asked their opinion of a hardware store's decision to
A) remain in business even though the store was not making an economic profit; 82 percent of those surveyed believed it would be unfair for the store to go out of business if there were no other hardware stores in the same area.
B) go out of business because a larger hardware store opened in the same city; 82 percent of those surveyed believed it was unfair for the larger store to compete with the smaller store.
C) sell tickets to sporting and cultural events at prices higher than prices paid at the ticket windows for the same events; 82 percent of those surveyed believed this was unfair.
D) raise the price of snow shovels the day following a snowstorm; 82 percent of those surveyed believed this was unfair.
D
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Did the fiscal policy of the 1930s bring an end to the Great Depression?
a. No, government spending and budget deficits as a share of GDP were relatively small during the 1930s, and there is little evidence that fiscal policy did much to stimulate output. b. No, even though budget deficits steadily rose from 2 percent of GDP in the early 1930s to more than 10 percent of GDP in 1939, this expansionary fiscal policy had little effect on output. c. Yes, even though the spending programs of the New Deal led to budget deficits, they also led to a steady reduction in the rate of unemployment during the latter half of the 1930s. d. Yes, the fiscal policy that kept the federal budget balanced throughout the 1930s created a stable business climate and eventually stimulated investment.
A firm in competitive price-taker market is maximizing profit at Q = 3,000 . Then its fixed cost increases. The profit-maximizing output is now
a. greater than 3,000 and profit decreases b. less than 3,000 and profit decreases c. greater than 3,000 and profit is unchanged d. equal to 3,000 and profit decreases e. equal to 3,000 and profit increases
Expansionary fiscal policy is ineffective if
A) there are idle resources in the economy. B) the MPC is less than 0.60. C) the government has a budget surplus. D) there is complete crowding out. E) a and d
Suppose an increase in market demand occurs in a constant-cost industry. As a result
A. perfectly competitive firms will eventually enter the industry. B. the new long-run equilibrium price will be lower than the original long-run equilibrium price. C. equilibrium quantity will decline. D. perfectly competitive firms will eventually leave the industry.