Which of the following is a disadvantage of the benefit principle?
a. It cannot be applied to transfer programs.
b. It does not apply to user charges.
c. It is completely incompatible with efficiency.
d. It closely resembles a market price.
a
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Adverse selection occurs when a sales offer attracts the kinds of customers that the seller does not want
Indicate whether the statement is true or false
Cost-price pricing typically does not result in profit-maximization. As a result, economists have two views of cost-plus pricing. One of these views is
A) cost-plus pricing is a good way to approximate the profit-maximizing price when marginal revenue or marginal cost is difficult to determine. B) cost-plus pricing is more likely to lead to profit-maximization for monopolistically competitive firms than for oligopoly firms. C) cost-plus pricing is more likely to result in profit-maximization the more elastic the firm's demand curve is. D) cost-plus pricing is more likely to lead to profit-maximization for large firms than for small firms.
If government spending increases, which of the following would be most likely in the short and in the long run? (Both comparisons are with regard to the original price level/output combination.)
a. Short-run increases in the price level, no change in output; long-run increases in output and in the price level b. Short-run increases in output and in the price level; long-run increase in output, decrease in the price level c. Short-run decreases in output and in the price level; long-run increase in the price level, no change in output d. Short-run increases in output and in the price level; long-run increase in the price level, no change in output e. Short-run decreases in output and in the price level; long-run decreases in output and in the price level
If velocity = 4, the quantity of money = 20,000 . and the price level = 2.5, then the real value of output is
a. 2,000. b. 200,000. c. 12,500. d. 32,000.