A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.
Given the scenario described, if the market price of grills is $300, who participates in the market?
A. Only Abe, Butch, and Collin participate.
B. Only Collin and Daniel participate.
C. Only Abe and Butch participate.
D. Only Daniel participates.
A. Only Abe, Butch, and Collin participate.
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A head tax applied to each person in the United States would
A. always be proportional. B. not significantly distort incentives to work. C. generally be a progressive tax. D. likely have significant shifting of tax incidence.
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
If the marginal cost curve shifts upward, a profit-maximizing, nondiscriminating monopolist is likely to respond in the short run by
a. raising price and increasing output b. raising price and decreasing output c. keeping price constant and increasing output d. reducing price and increasing output e. shutting down
The U.S. dollar is a good example of fiat money
a. True b. False Indicate whether the statement is true or false