When interdiction efforts manage to stem the flow of illegal drugs into the United States, assuming no change in demand, the price of these substances rises. This price increase leads to more crime as addicts attempt to maintain their now more-expensive habits. Economists call this side-effect of the drug business
a. the illusion of rationality.
b. an externality.
c. the cost disease of personal services.
d. inflation.
e. unemployment.
b
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Suppose the market in Figure 9.4 is currently in equilibrium. If the government establishes a price floor of $50, how many widgets will be sold?
A) 20 B) 30 C) 40 D) 50 E) 60
A firm is operating such that the marginal product of labor is 10 and the marginal product of capital is 20. The firm is minimizing its costs only if
A. the rental rate is half the wage. B. the wage is half the rental rate. C. since capital is more productive than labor, the firm must be minimizing cost. D. Given this information the firm can't be minimizing cost under any circumstances.
Why can a monopoly earn economic profits in the long run?
Related to the Economics in Practice on page 281: The foreign visitors to the temples of Laos are typically much richer than the local Laotians. This tends to make the foreign visitors ________ buyers when it comes to ticket prices to enter the temples.
A. perfectly elastic B. less elastic C. perfectly inelastic D. more elastic