If the production of a good generates a detrimental externality, then at that level of production of the good under perfect competition,
A. MU = MSC.
B. P < MPC.
C. MPC < MSC.
D. MPC > MSC.
Answer: C
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When a recessionary gap exists, actual output ________ potential output and the rate of inflation will tend to ________.
A. is less than; decrease B. is less than; increase C. exceeds; increase D. exceeds; decrease
When economists want to hold a number of factors constant, they are demonstrating which of the following expressions?
a. Positive economics model. b. Consumer sovereignty. c. Ceteris paribus. d. Normative economics.
Which of the following examples is most likely part of the underground economy?
a. Sam opens a hot dog stand at a busy intersection of a city. b. Avery trades in a used car to an automobile dealership. c. Hudson earns money going from house to house offering to shovel snow. d. Chloe sells official team souvenirs outside of a ballpark.
If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then maximum profit
A) equals $336. B) equals $882. C) equals $1,218. D) cannot be determined solely from the information provided.