Explain why economists care about unemployment
What will be an ideal response?
First, they care about unemployment because of its direct effect on the welfare of the unemployed. Unemployment is often associated with financial and psychological suffering. Second, they care about unemployment because it provides a signal that the economy may not be using some of its resources efficiently.
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Economists use a model that is a literal description of business’ behavior.
Answer the following statement true (T) or false (F)
A price ceiling can often be viewed as: a. the government setting price above market equilibrium price
b. an implicit tax on producers and an implicit subsidy to consumers. c. the government setting price below market equilibrium price. d. Both b and c.
Inflation is
A) a one time increase in the general level of prices. B) a persistent increase in the price of an individual good, service or resource. C) a persistent increase in the general level of prices. D) a one time increase in the price of an individual good or service.
The perfect competitor shown in the graph above is in the
A. short run making a profit.
B. short run taking a loss.
C. long run making a profit.
D. long run breaking even.