In the two-period model with production, an increase in anticipated future total factor productivity
A) has no effect on domestic output, but reduces the current account surplus.
B) increases domestic output and increases the current account surplus.
C) reduces domestic output, and increases the current account surplus.
D) has no effect on domestic output, but increases the current account surplus.
A
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The deadweight loss represents the sum of additional consumer and producer surplus should the firm produce the quantity where P = MC rather than where MR = MC
What will be an ideal response?
If global warming began to cause random world-wide damage to crops, insurance companies
A) would insure against specific crop failures. B) would not insure against specific crop failures. C) would be indifferent between insuring or not. D) would find themselves facing prosecution for ignoring the problem for so long.
The profit-maximizing firm should lay off workers when: a. MRC < MRP
b. MRC > MRP. c. MRC = MRP. d. the MP of labor begins to diminish.
As disposable income rises, consumption:
a. Increases and saving decreases b. And saving both decrease c. Decreases and saving increases d. And saving both increase