Refer to Figure 9.2. A movement from point d to point b could be caused by a(n)
A) increase in government spending.
B) increase in the price of oil.
C) increase in taxes.
D) decrease in short-run aggregate supply.
C
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A kinked demand curve
a. results from the heavy advertising expense required. b. occurs because, when one seller lowers the price, no one else will do so. c. is a basic characteristic of monopolistic competition markets. d. tends to be inelastic for price decreases and elastic for price increases.
In the long run, firms in a perfectly competitive market choose to produce a quantity:
A. that earns zero economic profits. B. that does not cover minimum average variable costs. C. where marginal costs are less than average variable costs. D. where ATC and AVC are at their minimum values.
Suppose that Spain has a comparative advantage in hats and Portugal has a comparative advantage in doormats. Under a system of free trade, each country specializes and then trades with the other. If the price increases from four hats per doormat to five hats per doormat,
a. people in Portugal will not want to buy as many hats b. Spain no longer has a comparative advantage in hats c. Portugal no longer has a comparative advantage in doormats d. some of the gains from trade shift to Portugal e. some of the gains from trade shift to Spain
Individual Retirement Accounts and 401(k) plans make the current U.S. tax system
a. less like European tax systems than it otherwise would be. b. more like a payroll tax than it otherwise would be. c. more like an income tax than it otherwise would be. d. more like a consumption tax than it otherwise would be.