Because of the kind of externalities that tend to be generated from general R&D resources bought by firms, the equilibrium price of R&D
A) is above the optimal level, and quantity is below the optimal level.
B) is below the optimal level, and quantity is above the optimal level.
C) and quantity of R&D are both above the optimal level.
D) and quantity of R&D are both below the optimal level.
E) must fall in order for the market to reach equilibrium.
D
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Proponents of the new classical macroeconomics do not believe which of the following?
A) Wages and prices will adjust rapidly in the economy. B) Workers and firms use information contained in Fed policy to form inflation expectations. C) The economy will normally be at its potential level. D) Expansionary monetary policy can be an effective policy tool.
Franco's Frozen Ice produces Italian flavored ice that is sold in the freezer section of grocery stores. Currently, Franco's does not have a fixed advertising budget and advertises in grocery stores' weekly advertising flyers and on the radio. A unit of advertising in the weekly flyers costs $1,500 and a unit of advertising on the radio costs $4,500. At their current advertising levels, the
marginal benefit of advertising in the flyer is $1,750 and the marginal benefit of advertising on the radio is $5,000. Which of the following is true? A) To maximize profits, Franco's should increase the amount of advertising in flyers and on the radio. B) To maximize profits, Franco's should increase the amount of advertising in flyers, but not change the amount of advertising on the radio. C) Franco's is currently maximizing its profits from advertising. D) To maximize profits, Franco's should decrease the amount of advertising in flyers and on the radio.
In a situation of excess supply in the labor market, there are:
a. many applicants for every job opening; employers will have an incentive to offer lower wages than they otherwise would have. b. few applicants for every job opening; employers will have an incentive to offer lower wages than they otherwise would have. c. many applicants for every job opening; employers will have an incentive to offer higher wages than they otherwise would have. d. few applicants for every job opening; employers will have an incentive to offer higher wages than they otherwise would have.
A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?
a. A ceiling on rents reduces the quantity and quality of housing available. b. Fiscal policy has a significant stimulative impact on a less than fully employed economy. c. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. d. The United States should implement universal health care for its citizens.