Answer the following questions true (T) or false (F)
1. An increase in the labor force shifts the production possibilities frontier inwards over time.
2. If additional units of a good could be produced at a constant opportunity cost, the production
possibilities frontier would be bowed outward (concave).
3. On a diagram of a production possibilities frontier, opportunity cost is represented by the production possibilities frontier shifting outward.
1. FALSE
2. FALSE
3. FALSE
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Refer to Sales Tax. After the tax is imposed, social gain is equal to
The following questions refer to the accompanying diagram which shows the effects of a sales tax imposed on consumers. The initial price and quantity are P0 and Q0, respectively. After the tax is imposed, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.
a. area A + D + E + G + H + J.
b. area B + C + F + I - J.
c. area A + B + C + D + E + F + G + H + I.
d. area A + B + C + D + F + G + I.
In general, more efficient taxes have:
A. lower administrative burdens. B. more complexity. C. lower revenues given the size of the tax. D. All of these statements are true.
Which of the following is NOT a characteristic of a centrally planned economy?
A. Consumers vote with their dollars thus guiding resources to produce what the society wants. B. Government sets the prices. C. The government decides how much of each good should be produced. D. All of these statements are characteristics of centrally planned economy.
As Sally increases her consumption of a good, she experiences diminishing marginal utility if her total utility
A) increases at a constant rate. B) increases at a decreasing rate. C) increases at an increasing rate. D) decreases.