The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. The efficient quantity of transportation services is ________ and the corresponding price is ________
A) 120; $14
B) 120; $8
C) 80; $12
D) 80; $6
C
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When factor markets are competitive, it always pays a profit-maximizing firm to
a. use more of the factor. b. bid very low prices for inputs. c. reduce the use of all inputs. d. use that quantity of input that makes MRP equal to the price of the input.
Based on the given figure, the economy is initially in long-run equilibrium at point A. If there is a favorable supply shock that increases potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then the new long-run equilibrium is reached at point:
A. E. B. C. C. B. D. D.
Which of the following information about fiat money is false? Fiat money
A) is backed by gold. B) serves as a medium of exchange. C) has little to no value except as money. D) is authorized by a central bank or governmental body.
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher