If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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Suppose good X has a negative income elasticity of demand. This implies that good X is
a. a normal good. b. a necessity. c. an inferior good. d. a luxury.
For a perfectly competitive firm, the value of the marginal revenue product is
A. marginal physical product times the wage rate. B. marginal physical product times the product price. C. the same thing as marginal physical product. D. the same thing as marginal factor cost.
The cost to taxpayers of smoking include
A. the cigarette taxes that are collected. B. decreased Social Security benefits to those who die prematurely from a smoking related illness. C. the increased cost of Medicaid patients who smoke. D. decreased long-term care costs for those who die prematurely from a smoking related illness.
Refer to the following graph.
Which of the following pairs of equations describes the supply and demand curves?
A. Qs = P; Qd = 0.25P + 22, respectively B. Qs = 10; Qd = 48 ? 2P, respectively C. Qs = 10; Qd = 12 ? 0.25P, respectively D. Cannot be determined