According to the Lucas supply function, if a firm mistakenly perceives that all prices are going ________ because its own output price is going ________, it will ________ its production level.
A. up; up; hold constant
B. up; up; increase
C. down; down; reduce
D. up; down; increase
Answer: A
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The less elastic the supply, the
A) less likely the government is to tax the product. B) less likely the government is to impose a price ceiling. C) larger the fraction of any tax imposed on the product that is paid by the suppliers. D) less elastic the demand.
The slope of the short-run aggregate supply curve shows that:
A. as overall price levels increase, firms are willing to produce more. B. as overall price levels decrease, firms are willing to produce more. C. firms are constrained to a certain level of output in the short run, regardless of the price. D. firms are constrained to a certain price in the short run, regardless of level of output.
When a tax is proportional, the average tax rate:
A. first increases with income, then decreases with income. B. is constant with income. C. decreases with income. D. increases with income.
In a market system, the distribution of goods and services among consumers is largely determined by:
A. The willingness and ability of consumers to pay the prices B. Whoever needs the goods and services the most C. Whoever has the closest connection to firms and the government D. A random factor that is almost impossible to predict