Inefficiency is best illustrated by which of the following?
a. foregoing civilian goods in order to produce more military goods
b. limiting economic growth by reducing capital spending
c. high levels of unemployment of labor and other resources that could be productively employed
d. producing outside the production possibilities frontier
c
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Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. What is the amount of the deadweight loss?
A. $8,888.89 B. $2,222.22 C. $1,333,33 D. $4,444.44
The firm depicted in Figure 8.1 is:
A) earning a positive economic profit. B) incurring an economic loss and should shut down. C) incurring an economic loss but it should continue to operate in the short run so long as price exceeds average variable costs. D) earning a zero economic profit.
Which condition would generate a violation of the Ricardian Equivalence?
A) downward sloping labor supply curve B) underdeveloped credit markets C) inflationary monetary policy D) deflationary monetary policy
Are jobs the key to economic progress and the achievement of high income levels?
a. Yes, as long as people are working, real income levels will be high. b. Yes, when full employment is present, income levels will be at their maximum. c. No, it is not just employment, but employment that expands production of goods and services that others value highly relative to cost. d. Uncertain, additional employment will increase real income only when the general level of prices is unchanged.