To determine how much of a good to produce to achieve allocative efficiency, we
A) construct a production possibilities frontier and choose the midpoint.
B) construct a production possibilities frontier and choose any point on it.
C) must produce on the PPF and at the point where the marginal benefit and marginal cost of the good are equal.
D) must produce on the PPF and at the point where the marginal benefit exceeds by any amount the marginal cost of the good.
E) must produce on the PPF and at the point where the marginal benefit exceeds by as much as possible the marginal cost of the good.
C
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Which of the following situations will arise in the domestic market following the imposition of an import quota?
A) imports decrease, domestic production decreases, prices increase B) imports increase, domestic production decreases, prices decrease C) imports decrease, domestic production increases, prices increase D) imports decrease, domestic production increases, prices decrease
The GDP deflator is a measure of
A) taxes and subsidies. B) changes in quantities. C) prices. D) depreciation. E) changes in nominal GDP.
The idea behind a flat tax is to _____
a. cut taxes on high-income taxpayers b. to raise taxes on high-income taxpayers c. increase progressivity d. minimize the excess burden of the income tax
During a recession, the political incentive structure will encourage politicians to
a. undertake sound economic policies that are consistent with stability and growth. b. adopt any policies, even bad ones, that give the appearance of taking action. c. undertake policies that promote long-term economic growth rather than short-term benefits. d. do nothing and let the recession run its course.