Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential
B. expansionary; lower; potential
C. expansionary; higher; potential
D. recessionary; lower; lower
Answer: A
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Somebody steals silverware from the dinner table at a nice restaurant
You question them and they justify their behavior by saying, "The restaurant management knows customers steal–they raise the price of their meals and drinks to cover the additional costs of stolen items. Since they pass on the higher costs to all of us who haven't stolen, I think it is only fair I finally get my share of the silverware." The economist would view the above statement as: A) incorrect, because even though people stole silverware, it doesn't make it any more profitable to raise prices. B) correct, because what's fair is fair. C) correct, because economics champions such selfish behavior. D) an ethical problem, and it has nothing to do with economics.
The equilibrium quantity in markets characterized by oligopoly is
a. higher than in monopoly markets and higher than in perfectly competitive markets. b. higher than in monopoly markets and lower than in perfectly competitive markets. c. lower than in monopoly markets and higher than in perfectly competitive markets. d. lower than in monopoly markets and lower than in perfectly competitive markets.
According to the crude quantity theory of money, if M were increased by 20%, what would happen to V, P, and Q?
What will be an ideal response?
(Consider This) Which of the following best explains why hospital charges of $25 per aspirin are not unusual?
A. Government payments for Medicare and Medicaid patients do not cover hospitals' fixed costs, so these costs must be distributed to other patients and their private insurance providers. B. Government exercises no cost control for Medicare and Medicaid, so hospitals get away with charging those patients $25 for an aspirin. C. Pharmaceutical companies have monopoly power over hospitals, allowing them to charge high prices for medications. D. Hospitals distribute a medically advanced form of aspirin that costs more to produce.