Suppose leisure is on the horizontal axis and dollars are on the vertical axis in the consumer-choice diagram. What happens to the budget line when a head tax is imposed?
a. The budget line shifts inward, but it may become steeper or flatter depending on the size of the head tax.
b. The budget line pivots about the horizontal intercept, becoming steeper.
c. The budget line become flatter, with the vertical intercept falling and the horizontal intercept remaining fixed.
d. There is an inward, parallel shift in the budget line.
d. There is an inward, parallel shift in the budget line.
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Given that food production is crucial to an economy, why shouldn't governments subsidize farmers' water use?
What will be an ideal response?
The United States has a balance of payments surplus with Europe. We would therefore expect the supply of euros to be __________ the demand for euros. Consequently, the euro should __________
A) less than; appreciate B) greater than; depreciate C) less than; depreciate D) greater than; appreciate
What price will a perfectly competitive firm typically charge in the long run?
a. A price that equals the minimum of its average cost of production b. A price that is lower than its average cost of production c. A price that ensures an accounting profit and an economic profit d. A price that is lower than the price charged by competitors
Investment goods are counted in GDP because they are
a. intermediate goods. b. purchased in their final form. c. usually exported as foreign investment. d. deductible business expenses.