All economic transactions involve only buyers and sellers; no third parties are involved
a. True
b. False
Indicate whether the statement is true or false
False
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Private goods are excludable and nonrival in consumption
a. True b. False
All of the following are likely to be effective at eliminating a recessionary gap except one. Which is the exception?
a. Reducing Social Security payments to beneficiaries b. Reducing personal income taxes c. Increasing government expenditures on the interstate highway network d. Increasing farm subsidies e. Reducing corporate income taxes
If left alone, a natural monopoly will
a. earn normal profits b. earn maximum economic profits c. produce where P = ATC d. face competition from new entrants e. go out of business