In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then consumers will pay a price of
A) $20 per unit.
B) $15 per unit.
C) $10 per unit.
D) $5 per unit.
D
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A game-theory explanation of the paradox that even though all countries would benefit if each chose free trade, in fact each tends to follow protectionist policies is
A) trade war. B) collective action. C) prisoner's dilemma. D) benefit-cost analysis. E) rent seeking.
Why do increasing returns to scale in an industry make it more likely that the industry will be oligopolistic rather than perfectly competitive?
What will be an ideal response?
If the self-correcting mechanism operates quickly,
A. direct intervention is less necessary to close a recessionary gap. B. fiscal stimulus is far more useful in closing a recessionary gap than monetary policy. C. monetary policy is far more useful in closing a recessionary gap than fiscal policy. D. fiscal stimulus is ineffective and inflation will occur.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A. B to A. B. C to D. C. B to D. D. A to C.