Due to a firm generating external costs, the government decides to ________ the firm. When this happens, the firm will produce ________ units of output than before the tax was imposed in order to continue maximizing profits.
A. tax; more
B. tax; fewer
C. subsidize; fewer
D. subsidize; more
Answer: B
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Assume that a seller in a perfectly competitive market charges more than competitors are charging. It is likely that this seller will:
A) increase his profit. B) increase his sales. C) lose only a few buyers. D) lose almost all of his buyers.
Which of the following is an effect of an increase in the price level in an economy?
a. The real value of dollar-denominated assets will fall b. The aggregate expenditure line will shift upward. c. The equilibrium real gross domestic product will increase. d. There will be a downward movement along the aggregate demand curve of the economy. e. The aggregate demand curve of the economy will shift rightward.
When the receipts given by goldsmiths to depositors were used to make purchases,
A. the gold standard was created. B. existing banking laws were violated. C. the receipts became in effect paper money. D. a fractional reserve banking system was created.
Assume a nation's current production possibilities are represented by the curve AB in the above diagram. Economic growth would best be indicated by a:
A. Shift in the curve from AB to CD
B. Shift in the curve from AB to EF
C. Movement from point 1 to point 2
D. Movement from point 3 to point 4