Which idea is inconsistent with pure competition?
A. Price-taking behavior
B. Product differentiation
C. Freedom of entry or exit for firms
D. A large number of buyers and sellers
B. Product differentiation
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Why do people refuse to pay for public goods?
What will be an ideal response?
Profit is the payment for
a. land and labor b. risk taking and innovation c. capital and labor d. risk taking and capital e. all of the factors of production
Consumer equilibrium occurs where the budget line is ____ to the ____ possible indifference curve.
A. tangent; highest B. equal; lowest C. marginal; maximum D. differential; highest
Use the following graphs to answer the next question.
In the graphs, the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve. All figures are in billions. The economy is at point Y on the investment demand curve. Given these conditions, what policy should the Fed pursue to achieve a noninflationary, full-employment level of real GDP?
A. Increase aggregate demand from AD3 to AD2. B. Increase interest rates from 4% to 8%. C. Decrease the money supply from $225 billion to $150 billion. D. Make no change in monetary policy.