When the price of a product exceeds the marginal cost of producing it, producers have a
A) consumer surplus.
B) producer surplus.
C) consumer shortage.
D) producer shortage.
E) deadweight surplus.
B
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The table above represents five points on the production possibility frontier for the small country of Baca, which produces only rugs (measured in thousands) and wheat (measured in thousands of bushels): Does the production possibility frontier
demonstrate the law of increasing opportunity cost? How can you tell?
If Y = income, G = government spending, T = autonomous taxes, and t = income tax rate, then the government budget deficit can be expressed as
A) G - T/Y(t). B) G - T. C) Y + G - T - ty. D) G - T - ty.
Suppose the Fed announced that it has chosen to accept a temporary period of above-target inflation. Assuming that the announcement is seen as credible, this will tend to increase inflationary expectations, which will result in
A) the AD curve shifting to the right. B) the AD curve shifting to the left. C) the AS curve shifting to the right. D) the AS curve shifting to the left.
Based on the demand curves for perfectly competitive firms and monopolists, the loss in revenue due to price effect applies to ______.
a. only monopolists
b. only perfectly competitive firms
c. both monopolists and perfectly competitive firms
d. neither monopolists nor perfectly competitive firms