Prices below the free market equilibrium price are inefficient because the willingness to pay by someone to consume an additional unit ________ the marginal cost to someone for producing that unit.
A. exceeds
B. is less than
C. equals
D. None of these; efficiency is defined in terms of natural resources, not market equilibrium.
Answer: A
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If there are no profits in competitive equilibrium, why do firms produce? How can they stay in business?
What will be an ideal response?
Excess capacity characterizes firms in monopolistically competitive markets, even in situations of long-run equilibrium
a. True b. False Indicate whether the statement is true or false
The concept that people should pay taxes based on the benefits they receive from government services is called
a. the ability-to-pay principle. b. the benefits principle. c. horizontal equity. d. vertical equity.
How are corporate profits taxed in the United States?
A) Earnings are taxed first by state sales taxes and then as corporate profits at the Federal level. B) Earnings are taxed first as personal income then as corporate profits at the Federal level. C) Earnings are taxed first as corporate profits then as personal income after dividends are paid. D) Corporate profits are not taxed at all.