To have shadow prices you have to have:
A. opportunity costs.
B. free markets.
C. laws.
D. money prices.
Answer: A
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According to the Application, economist John B. Taylor found that the aid to state and local governments which were a part of the 2009 stimulus package were used primarily to
A) increase spending on transfer programs, goods, and services. B) increase spending on goods and services. C) increase spending on transfer programs, but spending on goods and services declined. D) increase spending on infrastructure, but spending on transfer programs declined.
A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4. The price of the good is $5. To maximize its profit, this firm should
A) raise its price. B) lower its price. C) increase its output. D) decrease its output. E) increase the price it charges for its product.
Answer the following statements true (T) or false (F)
1. A decrease in investment can cause a decrease in the price level without affecting total output. 2. The level of total output and the price level can be affected by changes in consumption. 3. Total output and the price level may decline simultaneously. 4. If inventories are accumulating, income must be greater than spending. 5. A situation where exports exceed imports can cause total output to increase.
When producers would have been willing to accept lower prices at various quantities produced than the market clearing price, the differences are called
A. producer surplus. B. monopoly profits. C. consumer surplus. D. opportunity cost.