A firm's short-run supply curve is its marginal cost curve above the shut-down point.
Answer the following statement true (T) or false (F)
True
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Suppose you and I are identical. We put up fireworks in our adjacent backyards on a national holiday, and we can both enjoy each other's fireworks. a. Can you identify an externality? b. Can you identify any missing markets? c. Do you think we will provide more or less than the efficient number of fireworks? d. If we could vote on a tax to be imposed on us fund fireworks in our back yards, would we vote for a lump sum tax (imposed equally on both of us) that will cause more fireworks to be put up than what we would put up on our own? e. Suppose instead the government implements a Pigouvian subsidy. How would the number of fireworks compare to what would happen in (d)? How much of a subsidy would you think we would both get for every dollar of fireworks each of us individually buys?
What will be an ideal response?
The rate at which aggregate supply changes to restore equilibrium at potential output depends crucially on:
a. how quickly planned investment spending adjusts to changes in population growth b. how quickly planned consumption spending adjusts to changes in the price level and nominal wages. c. how quickly technology changes to increase aggregate supply. d. whether the economy is experiencing a recessionary gap or an expansionary gap. e. how quickly real wages adjust to restore full employment in the labor market.
Marginal utility of beer is the change in utility when production of beer changes.
Answer the following statement true (T) or false (F)
A decline in the exchange rate could have been caused by which of these factors?
A. An increase in the domestic real interest rate B. An increase in foreign output (income) C. A decline in domestic output (income) D. A decline in the world demand for domestic goods