If government spending in a country declines by $10 billion and, at the same time, taxes increase by an equal amount, what is the total effect in the economy?
a. Equilibrium real GDP increases
b. Equilibrium real GDP increases by $20 billion
c. Equilibrium real GDP is unchanged
d. Equilibrium real GDP decreases by more than $10 billion and less than $20 billion
e. Equilibrium real GDP decreases by more than $20 billion
d
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There are four lighthouses on the island of Sand. If this is the efficient quantity of lighthouses, ________
A) the marginal social benefit of the fourth lighthouse equals its marginal social cost B) total social benefit is zero C) marginal social benefit minus marginal social cost is a maximum D) Both answers A and C are correct.
Consider the two graphs above. Suppose rising fuel costs makes it more expensive to move goods to and from warehouses. This would ________ the desired level of inventories, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A
Perfect Shots is company specializing in wedding photos and they have a fixed advertising budget. Perfect Shots advertises on the radio and the television and it costs $5,000 per unit of radio advertising and $15,000 per unit of television advertising. At their current advertising levels, the marginal benefit from radio advertising is $4,800 and the marginal benefit from television advertising is
$15,250. To optimally allocate their advertising budget, Perfect Shots should ________. A) decrease the amount of advertising in radio and increase the amount of advertising in television B) decrease the amount of advertising in radio and television C) increase the amount of advertising in radio and television D) increase the amount of advertising in radio and decrease the amount of advertising in television
If demand is __________ and price is __________, total revenue will _________.
A. inelastic; raised; increase B. elastic; raised; increase C. inelastic; lowered; increase D. elastic; lowered; decrease