An active stabilization policy designed to limit the size of government would
a. raise G to eliminate a recessionary gap and lower taxes to eliminate an inflationary gap.
b. raise G to eliminate a recessionary gap and raise taxes to eliminate an inflationary gap.
c. reduce taxes to eliminate a recessionary gap and raise G to eliminate an inflationary gap.
d. reduce taxes to eliminate a recessionary gap and reduce G to eliminate an inflationary gap.
d
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The production possibilities curve in Figure 2.1 illustrates the notion of
A) opportunity cost. B) increased factory goods production. C) diminishing resources. D) increased farm produce production.
The current price of canvas messenger bags is $36 each and sales of the bags equal 400 per week. If the price elasticity of demand is -2.5 and the price changes to $44, how many messenger bags will be sold per week? Use the midpoint formula
What will be an ideal response?
For the simple case of a production function with two inputs in which the inputs are perfect complements, each isoquant is represented by:
A) a vertical line. B) a horizontal line C) a downward sloping straight line. D) a line that forms a right angle.
At an output level of 100, a monopolist faces MC = 15 and MR = 17. At output level q = 101, the monopolist's MC = 16 and MR = 15. To maximize profits, the firm
A) should produce 100 units. B) should produce 101 units. C) cannot maximize profits. D) is not a monopoly.