What assumptions lead to the conclusion that that the allocation of resources among firms is efficient
What will be an ideal response?
The assumptions that factor markets are competitive and open, that all firms pay the same prices for inputs, and that all firms maximize profits lead to the conclusion that the allocation of resources among firms is efficient.
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Comment on the following statement: "Isoquants must be downward sloping."
What will be an ideal response?
Why do banks create money? Do they create money to help the Federal Reserve control the money supply or is there a more basic reason?
What will be an ideal response?
If the coefficient a in the new classical expression for short-run aggregate supply were equal to zero,
A) aggregate output would always be at its full-employment level. B) the short-run aggregate supply curve would slope down. C) the short-run aggregate supply curve would be a horizontal line. D) aggregate output would only differ from its full-employment level if the actual price level did not equal the expected price level.
The fact that a gallon of gasoline commands a higher market price than a gallon of water indicates that
a. gasoline is an economic good but water is not. b. the marginal utility of gasoline is greater than the marginal utility of a gallon of water. c. the average utility of a gallon of gasoline is greater than the average utility of a gallon of water. d. the total utility of gasoline exceeds the total utility of water.