GDP tends to ________.
A. overstate economic welfare, because it does not include certain nonmarket activities such as the productive work of housewives
B. understate economic welfare, because it does not take into account increases in leisure
C. understate economic welfare, because it includes expenditures undertaken to offset or correct pollution
D. overstate economic welfare, because it does not reflect improvements in product quality
Answer: B
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If a typical monopolistically competitive firm is making short-run losses, then
A) as some firms leave, the demand for the products of the remaining firms will become more elastic. B) other more competitive firms will enter the market. C) as some firms leave, the remaining firms will experience an increase in the demand for their products. D) the industry will eventually cease to exist.
Which of the following is(are) indexed to inflation?
A. Standard deduction B. Employer contributions to pensions C. Gifts and inheritances D. None of the answer options are correct.
From society's perspective, the deadweight loss associated with a positive externality occurs because: a. producers bear the true cost of producing the good involved in the transaction
b. producers do not bear the true cost of producing the good involved in the transaction. c. consumers do not internalize the externality. d. consumers internalize the externality.
Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is
a. $0.50. b. $0.60. c. $0.70. d. $1.00.