Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply.
B. a reduction in aggregate demand.
C. an increase in long-run aggregate supply.
D. an increase in aggregate demand.
Answer: B
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Suppose Veronica sells teapots in the perfectly competitive teapot market. Her output per day and her costs are as follows:
Output per Day Total Cost 0 $20 1 32 2 37 3 48 4 61 5 75 6 92 7 113 8 136 Suppose the current equilibrium price in the teapot market is $10. To maximize profit, how many teapots will Veronica produce, what price will she charge, and how much profit (or loss) will she make? Draw a graph to illustrate your answer. Your graph should include Veronica's demand, ATC, AVC, MC, and MR curves, the price she is charging, the quantity she is producing, and the area representing her profit (or loss).
You are a government tax policy advisor. You are asked how to convert the U.S. income tax into a consumption tax. Which of the following is the best response?
a. It already is a consumption tax. b. Flatten the brackets into one rate. c. Exclude the first $25,000 of income. d. Allow unlimited contributions into IRAs
Assume the market was in equilibrium in the graph shown. If the market price were set to $12, which of the following is true?
A. For those still interacting in the market, some surplus is transferred from buyer to seller.
B. For those still interacting in the market, some surplus is transferred from seller to buyer.
C. Producers gain the surplus of those buyers who dropped out of the market.
D. Consumers gain the surplus of those sellers who dropped out of the market.
The establishment of the NAFTA agreement
A. was supported by most economists and people in the business community. B. has led to the loss of millions of U.S. jobs to Mexico. C. has more economic integration than the European Union. D. eliminated all internal tariffs among its three members.