“Cream skimming” usually results in
A. cross-subsidization of markets.
B. subsidies to rural consumers of the service.
C. regulations to provide universal service.
D. monopoly.
Answer: C
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Which of the following is cited as a problem with the kinked demand curve model?
A) It assumes that firms do not attempt to maximize profits. B) It assumes that firms determine the profit-maximizing level of output by equating marginal cost and average variable cost. C) It does not explain how the equilibrium market price is determined. D) It does not explain the price stickiness that is routinely observed in oligopolistic markets.
An increase in total factor productivity shifts the PPF
A) upward, but does not change its slope. B) upward, and also changes its slope. C) downward, but does not change its slope. D) downward, and also changes its slope.
A shortage of textbooks will cause
a. a decrease in the supply of textbooks b. a decrease in the demand for textbooks c. both an increase in the supply of textbooks and a decrease in the demand for textbooks d. an increase in the price of textbooks, caused by a shift of either the supply curve or the demand curve e. an increase in the price of textbooks