Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential
B. expansionary; lower; potential
C. expansionary; higher; potential
D. recessionary; lower; lower
Answer: A
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For a perfectly competitive palm tree nursery in South Carolina, the total revenue curve is
A) downward sloping. B) a horizontal line. C) upward sloping. D) U-shaped. E) undefined because the firm is perfectly competitive.
Refer to Figure 2-6. If the economy is currently producing at point A, what is the opportunity cost of moving to point B?
A) 60 thousand spoons B) 46 thousand forks C) 16 thousand spoons D) 12 thousand forks
Who is affected when a Pigouvian tax is imposed on a market with a negative production externality?
A. Producers B. Consumers C. Those affected by the externality D. All of these groups are affected when it becomes internalized.
The alternative combinations of two goods that a consumer can purchase with a given money income is:
A. a demand curve. B. a budget line. C. a production possibilities curve. D. consumer equilibrium.