Figure 10-1
?
If the perfectly competitive firm depicted in Figure 10-1 is currently producing at C, its profits
A. are equal to zero.
B. are negative, that is, it is suffering a loss.
C. are maximized.
D. could be higher if the firm produced at D.
Answer: C
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In a market with asymmetric information, hidden actions exist if:
A) the buyer or the seller takes actions that are relevant for but not observed by, the other party. B) the production or consumption of the good being transacted gives rise to positive externalities. C) the production or consumption of the good being transacted gives rise to negative externalities. D) the production of the good being transacted involves a huge opportunity cost.
Which of the following most accurately indicates the political incentive to spend and/or tax?
a. Politicians will find tax increases more attractive than increases in government expenditures. b. Voters will generally support higher taxes in order to eliminate budget deficits. c. Politicians are rewarded for raising taxes and punished for providing programs that benefit their constituents. d. Politicians are rewarded for providing programs that benefit their constituents and punished for raising taxes.
It has been noted that when the price of a good increases, people purchase less of the good. This is an example of
A) macroeconomic analysis. B) irrational behavior. C) normative economic analysis. D) positive economic analysis.
Hyperinflation refers to a(n)
A. very rapid increase in the overall price level. B. increase in both price level and output. C. very rapid decrease in the overall price level. D. decrease in unemployment which is accompanied by a rapid increase in wages.