According to economic theory, profits are maximized at the rate of output where
A) price equals total revenue.
B) marginal revenue equals marginal cost.
C) economic profits are zero.
D) price and marginal revenue are equal.
B
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The CPI market basket
A) weights the goods and services according to the budget of an average urban household. B) determines the best possible way of taxing the average urban household. C) determines how the spending patterns of the average urban household change from month to month. D) determines how spending patterns change from urban household to urban household. E) changes from one month to the next in order to calculate the CPI.
The efficiency case made for free trade is that as trade distortions such as tariffs are dismantled and removed
A) government tariff revenue will decrease, and therefore national economic welfare will decrease. B) government tariff revenue will decrease, and therefore national economic welfare will increase. C) deadweight losses for producers and consumers will decrease, hence increasing national economic welfare. D) deadweight losses for producers and consumers will decrease, hence decreasing national economic welfare. E) government tariff revenue will increase, hence increasing national economic welfare.
The deadweight loss of a specific tax will be a small share of the tax revenue collected if:
A) supply is more inelastic than demand. B) demand is more inelastic than supply. C) supply and demand are both elastic. D) supply and demand are both inelastic.
When the central bank of a country sells government bonds, _____
a. money flows from individual banks to the central bank, thus increasing the money supply in the economy b. money flows from the central bank to individual banks, thus reducing the money supply in the economy c. money flows from individual banks to the central bank, thus reducing the money supply in the economy d. money flows from the central bank to individual banks, thus increasing the money supply in the economy