Which of the following is a primary difference between price searchers and price takers?
a. Price searchers maximize profits, but price takers do not.
b. Price searchers have to cut their price to sell additional output, but price takers do not.
c. The market demand for goods produced by price searchers is downward sloping, while the market demand for goods produced by price takers is horizontal.
d. Profit-maximizing price searchers will expand output to the quantity where marginal revenue equals marginal cost, but price takers will not.
B
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Tax avoidance is
A. illegal in the United States. B. changing your behavior so as to reduce your tax liability. C. the same as tax evasion. D. a minor source of concern in the United States.
The Keynesian short-run aggregate supply curve is demonstrated graphically as a
A) vertical line. B) horizontal line. C) upward sloping curve. D) downward sloping curve.
Large federal budget deficits: a. can best be reduced by automatic stabilizers
b. make it difficult to use discretionary fiscal policy. c. in the mid to late 1980s were the result of a severe recession. d. constitute only about 1 percent of GDP. e. have little to do with the growth of the federal debt.
In the classical model, a basic theoretical feature of self-regulating markets was that
a. unsold inventory and labor unemployment would cause prices and wages to increase. b. lower wages and prices would eliminate unemployment and unsold inventory. c. unsold inventory would never occur. d. an increase in planned saving would cause an increase in the interest rate and a decrease in investment.