If perfectly competitive industry B is currently realizing economic profits, we would expect that:
a. industry output will fall, good B will fall in price, and economic profits will tend to disappear.
b. industry output will fall, good B will rise in price, and economic profits will tend to disappear.
c. industry output will rise, good B will fall in price, and economic profits will tend to disappear.
d. industry output will rise, good B will fall in price, and economic profits will tend to increase.
c
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An example of the "equity vs. simplicity" tradeoff is the tax treatment of
A. capital gains. B. spouses. C. earned income. D. children.
Answer the following statement(s) true (T) or false (F)
1. If a model is based on unrealistic assumptions, then it cannot be robust. 2. Equilibrium conditions are used to analyze the desirability of economic outcomes. 3. A Nash equilibrium is one in which each individual optimizes taking market prices as given. 4. Efficiency is one common criterion that economists use to judge whether or not an outcome is desirable. 5. Even if an economic model is not detailed enough to give numerical predictions, it might still be useful if it can indicate the direction of change in economic variables.
The unit of account function of money: a. means that money should be durable
b. means that money makes price information more accessible. c. requires that money be made of something valuable. d. means that money can be used to save up purchasing power. e. means that money is more easily counted than goods.
Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The workers in Country A should specialize in ________ because they possess the ________ in the production of that good.
A. bananas; comparative advantage B. tomatoes; absolute advantage C. tomatoes; comparative advantage D. bananas; absolute advantage