It is possible for an economy to produce more than its potential level of output, at least for a short period of time
a. True
b. False
A
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Answer the following statement(s) true (T) or false (F)
1. If a market is perfectly competitive, allocative efficiency is achieved at the point where the profit-maximizing firm produces. 2. If a firm maximizes output from a stock of available resources, it must be achieving allocative efficiency. 3. Consumer surplus is the net gain to the firm measured as the excess of price over the marginal cost of production summed over all units sold. 4. If a consumer is willing to pay more for a good than he/she actually must pay, he/she enjoys a gain for that unit of output known as consumer surplus. 5. The sum of the change in consumer surplus plus the change in producer surplus is called deadweight loss to society.
When a rent ceiling below the equilibrium rent is put in place, the outcome is
A) efficient because marginal benefit equals marginal cost. B) inefficient because marginal benefit equals marginal cost. C) inefficient because marginal benefit is greater than marginal cost. D) inefficient because marginal benefit is less than marginal cost. E) efficient because marginal benefit is greater than marginal cost.
There is evidence that income per worker is converging in
A) the richest countries and the poorest countries. B) the richest countries, but not the poorest countries. C) the poorest countries, but not the richest countries. D) neither the richest nor the poorest countries.
Monetary and fiscal policy making that is carried out in response to a pre-set rule and does not respond to changes in economic activity is known as
A) active policy making. B) discretionary policy making. C) nondiscretionary policy making. D) Keynesian policy making.