Why are the prices of some regulated industries often higher than they would be if there were no regulation?
Regulators are often concerned to prevent the failure of firms in an industry. In order to prevent bankruptcy, prices may be raised above competitive levels. If a firm is not responsive to customers, or does not innovate or produce efficiently, it may still earn a profit because the regulatory agency protects it from paying the market price of its failure. The agency is more concerned in this case with maintaining firms than with efficiency and promoting consumer utility.
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In the market for potatoes, where price level reaches its low in October and its peak in June, speculators help to:
a. keep the equilibrium price uniform over the year. b. lower the level of consumption in June. c. lower the level of consumption in October. d. keep the equilibrium price level low over the year.
In 2011, the average American paid approximately how much to the federal government in taxes?
a. $2,000 b. $2,500 c. $8,000 d. $10,500
What is fiat money? Why is fiat money important in the United States today?
What will be an ideal response?
When there is an increase in aggregate demand in the long run, there will be an increase in the price level but not in the level of output or employment.
Answer the following statement true (T) or false (F)