According to the law of demand, if the price of a netbook decreases, ceteris paribus, the demand for netbooks would increase
a. True
b. False
Indicate whether the statement is true or false
False
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Suppose there are two policy options facing a vote in the Senate. In the first, government spending will increase $50 billion, while the second option is to cut taxes by $50 billion. A Keynesian economist would argue for
A) the spending option because it has a bigger impact on total spending. The spending directly raises total spending plus it works through the multiplier, while the tax cut only works through the multiplier. B) the tax option because it is easier to pass. The effects on total spending would be identical. C) the spending option because it won't affect the deficit the way the tax cut would. D) the tax option because it also affects the incentives workers face. Long-run aggregate supply will increase with the tax cut, but not with the spending increase.
Which of the following examples best describes the concept of free entry?
A) Jack has an old cell phone that he wants to sell. He opens an account on eBay and auctions it off. B) Purecircuit Cor
In contrast with perfect competition, excess capacity characterizes monopolistic competition. Excess capacity is due to which of the following?
A) Monopolistically competitive firms face downward-sloping demand curves. In the long run, firms produce where their demand curves are tangent to their long-run average total cost curves. B) Monopolistically competitive firms produce at the minimum point on their average total cost curves. C) Monopolistically competitive markets have low barriers to entry. D) Monopolistically competitive firms produce where marginal revenue is equal to marginal cost.
Monopolistic and perfect competition are alike in that: a. a firm's long-run equilibrium output is located where long-run average total cost is increasing. b. a firm's long-run equilibrium output is located where long-run average total cost is minimized. c. firms earn a normal rate of return in the long run
d. firms are price takers.