. Fill in the blanks. For an inferior good, the income effect is _________, and the substitution effect is _______.
a. positive; positive
b. positive; negative
c. negative; positive
d. negative; negative.
b. positive; negative
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Governments often intervene in international trade and impose quotas to
A. shift a nation's production possibilities frontier. B. improve the performance of multinational corporations. C. increase revenues from export subsidies. D. protect domestic industries from foreign competition.
Examples of incentive pay include
a. allowing employees a certain number of personal days b. royalties to textbook authors c. cleaning the worksite with weekly janitorial service d. offering a certain number of sick days
When a system of pollution rights is in effect, polluters have no economic incentive to reduce the amount of pollution they generate
a. True b. False
Which of the following statements best describes the price, output, and profit conditions of monopolistic competition?
a. Price will equal marginal cost at the profit-maximizing level of output; profits will be positive in the long-run. b. Price will always equal average variable cost in the short run and either profits or losses may result in the long run. c. Marginal revenue will equal marginal cost at the short run, profit-maximizing level of output; in the long run, economic profit will be zero. d. Marginal revenue will equal average total cost in the short run; long-run economic profits will be zero.