Refer to Scenario 10.9. At the profit maximizing level of output, what is the level of consumer surplus?
A) 0
B) 1,800
C) 2,700
D) 3,600
E) 4,800
B
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Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
The demand for a new effective drug for the cure of AIDS would most likely be
a. elastic. b. unit elastic. c. perfectly elastic. d. highly inelastic.
If the marginal rate of substitution of X for Y is 2, the price of X is $3, and the price of Y is $1, a utility-maximizing consumer should
A. prefer 3Y to 1X. B. be indifferent between 1X and 2Y. C. choose less X and more Y. D. choose more X and less Y.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease