A government-imposed maximum price will have no economic impact if
A. it is above the equilibrium price.
B. it is below the equilibrium price.
C. it is at or below the equilibrium price.
D. there is a fixed supply of the good.
Answer: A
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Monopolistically competitive firms must produce where there is an optimal allocation of resources because the firms do not present significant barriers to entry to potential competitors.
Answer the following statement true (T) or false (F)
Answer the following statements true (T) or false (F)
1) Within the circular flow model, the level of total resource income and total spending on output will be approximately equal. 2) In determining GDP by the expenditures method, it is appropriate to use net investment rather than gross investment as a measure of investment spending. 3) Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity. 4) Interest on the public debt is included as a part of government purchases in determining GDP by the expenditures method. 5) All expenditures on new construction are included as investment in calculating GDP.
Consider the following two situations. (i) You purchase a $10 movie ticket in advance over the Internet, but when arriving at the theater, you realize that you lost the ticket. The only way to see the movie is to purchase a new ticket
(ii) On the way to seeing a movie, you drop a $10 bill. You still can afford the movie, but you have lost the $10. How should you, a rational person, respond to the two situations? A) You should still see the movie in both situations. B) You should respond the same way to each situation, whether it is to see the movie or not. C) In the first situation, you should skip the movie; in the second, you should still see the movie. D) In each situation, you should not see the movie.
Measures of student performance have not increased even though per-pupil government subsidies have increased because
A) there is a need for more funds to be spent. B) we have declining enrollment in public schools. C) parents and children value the last unit of educational services received more than the cost. D) parents and children value the last unit of educational services received less than the cost.