The law of increasing costs holds that the opportunity cost:
a. of a good decreases as the quantity of the good produced increases.
b. of a good is proportional to the resources used in its production.
c. of a good increases as more of the good is produced.
d. of a good does not change with the resources used its production.
e. changes as more of the good is produced.
c
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Return to the market for cigarettes from the previous question. What per-unit tax could the government levy to eliminate the deadweight loss from the behavioral bias?
a. 0 b. 1 c. 50 d. 100
If toast and butter are complements, then which of the following would increase the demand for toast?
a. a decrease in the price of toast b. a decrease in the price of butter c. an increase in the price of butter d. Both a and b are correct.
The law of demand is illustrated by a demand curve that is:
a. Vertical b. Downward sloping c. Horizontal d. Upward sloping
A new member of Congress notes that "[p]ersonal income tax collections automatically fall and transfers and subsidies automatically rise as national income declines." This observation best describes how the personal income tax, transfers, and subsidies:
A. produce the cyclically adjusted budget. B. cause crowding out and reduce equilibrium GDP. C. contribute to the recognition lag with fiscal policy. D. serve as built-in stabilizers.