The aggregate supply curve normally
A. slopes downward and to the right due to higher resource prices.
B. has a horizontal slope equal to zero.
C. is very steep in the lower portion and flatter in the upper portion.
D. slopes upward to the right due to short-run fixed costs of production.
Answer: D
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Suppose the government levies a per-unit tax on TVs, and this tax increases the price of TVs by $10. a. On a graph with TVs on the horizontal axis and "$'s of other consumption" on the vertical, illustrate how the budget constraint for a consumer with exogenous income changes as a result of the tax. b. Suppose you know the bundle on the after-tax budget that is chosen by the consumer. Illustrate on your graph how much in tax revenue the government is raising from this consumer. c. If the government replaced the tax on TVs with a lump sum tax that does not alter any prices but raises the same amount of revenue from the consumer, how would this consumer's budget constraint change?
What will be an ideal response?
The basic reason that a competitive unregulated market produces an inefficient amount of a good with an external cost is because
A) producers cannot measure marginal social cost. B) producers do not pay the external cost. C) the general public does not care about external costs. D) external costs are not a political issue. E) the external cost is paid by consumers rather than producers.
Refer to Figure 10-9. If the consumer has $240 to spend on DVDs and CDs, what is the price of a CD if the budget constraint is BC2?
A) $8 B) $10 C) $20 D) $40