At each point on an indifference curve:
A. money income is the same.
B. the prices of the two products are the same.
C. total utility is the same.
D. marginal utility is the same.
Answer: C
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Governments can most effectively encourage a firm to produce the efficient level of output of a good whose production causes a beneficial externality by
A. increasing the demand at every price for the good. B. subsidizing the production of the good. C. taxing the production of the good. D. imposing a price ceiling on the good.
Suppose the market clearing price for gasoline is $2.25 per gallon. Now suppose that policy makers pass a law requiring that the maximum price that can be charged is $2.0 per gallon. Such a situation is an example of
A) a price control that will lead to a surplus of gasoline on the market. B) a price floor that will lead to a shortage of gasoline on the market. C) a price ceiling that will lead to a shortage of gasoline on the market. D) a price floor that will lead to a surplus of gasoline on the market.
The long run is defined as the time period in which
A) the firm can vary only one input. B) the firm can make positive economic profits. C) all factors of production can be altered. D) the firm can alter its rate of production.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles
A. increases. B. initially increases, then decreases. C. decreases. D. remains constant.