Higher prices may serve the public interest when
A. there is a shortage of goods or services available.
B. there is an equal distribution of traffic on alternate routes.
C. higher prices never serve the public interest.
D. lower prices signal scarcity.
Answer: A
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Suppose tastes for consumption now and consumption in the future have constant elasticity of substitution. It may then be the case that a tax on interest income is efficient even if savings (defined as current income not consumed) fall in response to the tax.
Answer the following statement true (T) or false (F)
Given the information in the table above, if wages were to double in Home, then Home should
A) export cloth. B) export widgets. C) export both and import nothing. D) export and import nothing. E) export widgets and import cloth.
In an economy described by the assumptions of the simple Keynesian Model, the impact of fluctuations in autonomous investment on consumption spending could be
A) caused by government tax and spending policies. B) explained by changes in output, Y. C) endogenous. D) offset by government tax and spending policies.
Which of the following statements is true?
a. Accounting profit usually is greater than economic profit. b. Accountants ignore explicit costs in calculating profit. c. Explicit costs fall as output increases. d. Advertising is an implicit cost. e. Economic profit always increases as output increases.