Freely functioning markets
A. have no need for government intervention.
B. may be unfair due to significant income disparities that result.
C. always produce an efficient allocation of resources.
D. All of the above are correct.
Answer: B
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Inflation can be caused either by rapid growth rate of aggregate demand or by sluggish growth of aggregate supply.
Answer the following statement true (T) or false (F)
Assume price exceeds average variable cost over the relevant range of demand. If a monopolistically competitive firm is producing at an output where marginal revenue is $23 and marginal cost is $19, then to maximize profits the firm should
A) continue to produce the same quantity. B) decrease output. C) shut down. D) increase output.
A person who is, all else equal, more willing to throw away a $20 shirt than a $200 shirt, even if both are worn out, is:
A. dynamically inconsistent. B. dynamically consistent. C. demonstrating sunk cost fallacy. D. demonstrating pre-commitment.
If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana. These advocates believe that the
a. supply for marijuana is elastic. b. demand for marijuana is elastic. c. supply for marijuana is inelastic. d. demand for marijuana is inelastic.