If a price ceiling of $8 were placed in the market in the graph shown:
A. a shortage of 7 would occur.
B. a shortage of 15 would occur.
C. a shortage of 23 would occur.
D. a shortage of 8 would occur.
C. a shortage of 23 would occur.
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Exhibit 10-2 A monopolistic competitive firm
Comparing the firms in a monopolistic competitive industry shown in Exhibit 10-2 to a perfectly competitive firm in long-run equilibrium, we find that both firms
A. choose a price equal to the marginal cost at the profit-maximizing quantity. B. will experience entry of new firms into the industry. C. earn zero economic profits. D. minimize cost per unit at their profit-maximizing quantity.
During the Great Depression, the unemployment rate rose to a maximum of about
A) 10 percent. B) 25 percent. C) 50 percent. D) 13 percent. E) 67 percent.
Parvez is trying to decide whether or not he should lend $1,000 to Eli for a year. Eli would pay a fixed nominal interest rate of 8 percent. Parvez expects the inflation rate to be 4 percent for the year. If he does not lend the $1,000 to Eli, Parvez will purchase an indexed savings bond that pays an interest rate of 4 percent, or he will put the money in a (nonindexed) savings account earning 6
percent. Parvez a. will earn 4 percent in real terms if he loans Eli the money, 0 percent in real terms if he buys the bond, and 6 percent in real terms if he puts the money into a savings account b. is better off holding his money as cash c. is indifferent between lending the money to Eli and buying the bond because the real interest rate is the same in either case d. should purchase the bond because it earns the highest real rate of interest e. earns the highest real rate of interest if he puts his $1,000 into a savings account
If a tax is progressive, the average tax rate
A. remains the same as income rises. B. rises as income rises. C. falls as income rises. D. falls with passage of time.