The aggregate supply curve
a. indicates the markup at which firms are willing to supply a given level of output
b. is derived from equilibrium conditions in the money market
c. has a positive slope because an increase in real GDP causes an increase in the cost of resources
d. is found by summing up the supply curves of all the firms in an economy
e. illustrates how a change in the price level affects total output
C
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One reason patent protection is vitally important to pharmaceutical firms is
A) successful new drugs are not profitable. If firms are not granted patents many would go out of business and health care would be severely diminished. B) the approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process. C) the high salaries pharmaceutical firms pay to scientists and doctors make their labor costs higher than for any other business. Profits from patents are needed to pay these labor costs. D) that taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes.
A side effect of a price floor set above the equilibrium price is:
a. the new price is below equilibrium price. b. an excess supply of the good is created. c. an excess demand for the good is created. d. the supply of the good decreases. e. the demand for the good increases.
If the production of a good generates a positive externality, then:
A. there will be deadweight loss at the market equilibrium quantity. B. production of the good is harmful. C. total economic surplus will be maximized at the market equilibrium quantity. D. the government should tax producers of the good.
Table 14.2Table 14.2 represents 3 markets for used guitars. Which of the markets in Table 14.2 are NOT in equilibrium?
A. 1 only B. 2 only C. 3 only D. 2 and 3