A proposed increase in the federal income tax rates may actually be viewed favorably by many mayors of cities because:
A. it will allow them to also raise their tax rates.
B. it will cause the price of municipal bonds to increase and their yields to decrease.
C. people will pay less attention to local taxes.
D. it will cause the demand for municipal bonds to increase and their yields to increase.
Answer: B
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Which of the following is true of perfectly competitive firms? a. It is difficult for entrepreneurs to become suppliers of a product in a perfectly competitive market structure. b. A perfectly competitive firm has a perfectly elastic supply curve
c. In a perfectly competitive market, an individual seller can change his price and it will not alter the output he sells. d. None of the above are true.
A monopolistically competitive firm is currently producing 20 units of output. At this level of output the firm is charging a price equal to $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18 . From this information we can infer that
a. the firm is currently maximizing its profit. b. the profits of the firm are negative. c. firms are likely to leave this market in the long run. d. All of the above are correct.
If two goods are complements, a fall in the price of one will lead to an increase in demand for the other.
a. true b. false
If memberships in health clubs and hospital fitness centers are substitutes and the price of health club memberships rises, what will happen?
A. Demand for health club memberships will fall. B. Demand for health club memberships will rise. C. Demand for hospital fitness center memberships will rise. D. Demand for hospital fitness center memberships will fall.