The existence of lags prevents the instantaneous adjustment of the economy to policies changing aggregate demand, thereby strengthening the case for
A) supply-side policy.
B) nonactivists.
C) activists.
D) demand-management policy.
B
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It is appropriate to use the supply-and demand-model if, in a market
A) everyone is a price taker with full information about the price and quality of the good. B) firms sell identical products. C) costs of trading are low. D) All of the above.
Which of the following is true?
a. During any given year, the size of the economic pie available for allocation to individuals is fixed. b. When the link between worker productivity and reward is weakened, individuals have less incentive to create income. c. If they reduce income inequality, taxes and income transfers will not alter the incentive of individuals to engage in productive activity. d. The total output of an economy is unrelated to the distribution of income.
Consider a firm with the following cost information: ATC = $15, AVC = $12, and MC = $14. If we know that this firm has decided to produce Q = 20 by following the rule to maximize profits or minimize losses, then the price of the output is:
A. $12. B. $14. C. $15. D. $20.
Answer the following statements true (T) or false (F)
1. If the decrease in supply is less than the decrease in demand, then the equilibrium price will decrease. 2. A price ceiling imposed by the government is intended to benefit the sellers of the product. 3. An effective price ceiling will lower the equilibrium price and cause a surplus. 4. In response to the general public's complaints about "price gouging" by sellers, the government could impose a price floor.