Refer to Figure 27-7. Given that the economy has moved from A to B in the graph above, which of the following would be the appropriate fiscal policy to achieve potential GDP?
A) increase government spending B) contractionary fiscal policy
C) increase taxes D) decrease interest rates
A
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Refer to the figure above. What is the absolute value of the arc elasticity of demand when the price falls from $8 to $4?
A) 2 B) 4 C) 8 D) 10
Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $1
A) not enough consumers want to buy iced tea. B) the quantity supplied is economically efficient but the quantity demanded is economically inefficient. C) economic surplus is maximized. D) the quantity supplied is less than the economically efficient quantity.
A collective-action problem is a situation in which:
A. people are often reluctant to voluntarily pay for goods and services that provide benefits for everyone, even for those who don't pay. B. people are reluctant to voluntarily pay for goods and services because they believe their individual contribution will not make a difference. C. a group of people stand to gain from an action that is not rational for any of the members to undertake individually. D. a small group of individuals gains power that sways the decisions of society to their personal gain at the expense of the larger society.
Market failure occurs when a market maximizes net social welfare
a. True b. False Indicate whether the statement is true or false