Legal limits on prices will tend to cause misallocation of resources because
A. the market price does not reflect the costs of production.
B. people are unable to determine their preferences at the high or low price.
C. producers are able to produce less efficiently.
D. consumers no longer have incentive to spend their income efficiently.
E. All of these responses are correct.
Answer: A
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The difference between personal income and disposable income is:
A) corporate taxes B) personal taxes C) savings D) none of the above
In a perfectly competitive labor market, the labor supply curve facing the firm will be
A) upward sloping. B) downward sloping. C) horizontal. D) vertical.
One reason that people hold money is to pay for unexpected car repairs and other unpredictable expenses. This motive for holding money is called:
a. transactions demand. b. precautionary demand. c. speculative demand. d. noncyclical demand.
If the SRAS curve intersects the AD curve to the right of Natural Real GDP, the economy is
A) in a recessionary gap. B) in either a recessionary gap or an inflationary gap, but we need more information to determine which one. C) in an inflationary gap. D) at full-employment Real GDP.