The principle of minimum differentiation reflects the
A) tendency for firms to produce at minimum marginal cost in order to compete with one another.
B) tendency for political parties to make themselves identical to appeal to the median voter.
C) concept of minimizing the difference between total benefit and total cost to produce efficiently.
D) attempt to minimize the free-rider problem.
B
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The main sources of cost-push inflation are increases in
A) the money wage rate and the price of raw materials. B) the real wage rate and the price of raw materials. C) the money wage rate and aggregate demand. D) the quantity of money and the real wage rate. E) government expenditure and the quantity of money.
Refer to Figure 11.2. Assume the economy is in equilibrium at 1, where real GDP equals potential GDP, and then the economy experiences a positive demand shock. Other things equal, the positive demand shock is best represented by a(n)
A) movement up along the Phillips curve. B) movement down along the Phillips curve. C) upward shift of the Phillips curve. D) downward shift of the Phillips curve.
A given supply curve has a zero intercept. At the current equilibrium price the price elasticity of supply equals
A) 1. B) 0. C) 2. D) Not enough information.
Productivity tends to
A. fall during expansions. B. rise during expansions. C. rise throughout the business cycle. D. rise during contractions.