Because taxes distort incentives, they cause markets to allocate resources inefficiently
a. True
b. False
Indicate whether the statement is true or false
True
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Explain the potential downfalls of the Fed implementing an expansionary monetary policy or contractionary monetary policy at the wrong time
What will be an ideal response?
Even though airfares have been increasing, the revenue earned by airlines has declined. Based on this statement, what may be concluded about price, cross-price, or income elasticity of demand?
What will be an ideal response?
If a consumer is indifferent between 5 units of A and 8 units of B, then the consumer would:
a. also be indifferent between 4 units of A and 9 units of B. b. also be indifferent between 8 units of A and 5 units of B. c. prefer 6 units of A and 8 units of B. d. give up 1 unit of A if he/she could acquire 2 units of B. e. not trade product A in exchange for any units of product B.
Additional firms often do not try to compete with a natural monopoly because
a. they fear retaliation in the form of pricing wars from the natural monopolist. b. they are unsure of the size of the market in general. c. they know they cannot achieve the same low costs that the natural monopolist enjoys. d. the natural monopoly does not make a large profit.