Crowding out is important only in the classical model
a. True
b. False
B
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Suppose the factory Afro-Puffs Inc. produces wigs. As a by-product of this wig production, they also produce dangerous emissions of toxic gases (as a result of the strong glue used to hold the hair in place). The De-Lite car factory, down the road, experiences a negative externality from this production process. Suppose that the supply curve (private marginal costs) for the wig factory is X = (2/5)P - 2, and it faces a market demand of X d = 15 - P/2. The marginal damages caused by the production of wigs can be written as X = P - 1/2.
(a) Find the equilibrium price and quantity in the market for wigs. (b) Find the socially optimal level of wigs and the corresponding price. (c) How much should the wig factory be taxed per wig?
The longest and most severe recession in the United States since 1925 began in:
A. 1929. B. 1957. C. 1945. D. 1982.
Which statement is true about any of the federal budget deficits of the 1990s?
A. The deficits were a little larger than the national debt. B. The deficits and the national debt were about equal. C. The national debt was a little larger than the deficits. D. The national debt was much larger than the deficits.
Assume that an economy has 1500 workers, each working 2000 hours per year. If the average real output per worker-hour is $20, then total output or real GDP will be:
A. $3 million. B. $45 million. C. $30 million. D. $60 million.