Use the sticky-wage theory of aggregate demand to explain the short-run Phillips curve
According to the sticky-wage theory, nominal wages are set in advance based on the price level that firms and workers expect to prevail. When prices rise more than was expected, prices rise more than wages. This increase in prices relative to wages gives firms incentive to employ more workers to produce more output. Since prices are higher than expected if inflation is higher than expected, it follows that unemployment will fall when inflation is higher than expected.
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A decrease in supply is graphically represented as a
A) rightward shift of the supply curve. B) leftward shift of the supply curve. C) movement up and to the right on a supply curve. D) movement down and to the left on a supply curve.
The inefficiency of a sales tax on a good is ultimately the result of the
A) low tax revenue earned by the government relative to the cost of collection. B) wedge between what buyers pay for the good and what sellers receive for the good. C) buyers being unable to avoid paying the tax. D) sellers being unable to avoid paying the tax. E) increase in the consumer surplus that is more than offset by the decrease in the producer surplus.
Provide an example of each allocation method that illustrates when it works well
What will be an ideal response?
If in some range of production average cost is falling, the firm is experiencing
a. increasing returns to scale. b. decreasing returns to scale. c. constant returns to scale. d. increasing costs per unit of output.