Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________.
A. Q2; P3
B. Q2; P1
C. Q4; P1
D. Q3; P2
Answer: C
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In the monetary small open-economy model, a flexible exchange rate insulates the domestic price level from
A) both real and nominal shocks from abroad. B) real shocks from abroad, but not from nominal shocks from abroad. C) nominal shocks from abroad, but not from real shocks from abroad. D) neither real nor nominal shocks from abroad.
The long-run Phillips curve is consistent with
a. a negative relationship between unemployment and the rate of expected inflation. b. the expected real wage being equal to the actual real wage. c. the actual price level being equal to the expected price level. d. no relationship between inflation and unemployment. e. all of the above except a.
Supply-side economists argue that decreasing marginal tax rates
A) increases productivity and shifts the AS curve to the right. B) increases productivity and shifts the AS curve to the left. C) increases productivity and shifts the AD curve to the left. D) due to the Ricardian equivalence, has no impact on the economy.
An official agreement with another country to restrict the quantity of its exports to the U.S. is
A) a regional trade bloc. B) the quota system. C) a voluntary import expansion. D) a voluntary restraint agreement.