What is meant by the term "economic efficiency"?
What will be an ideal response?
Economic efficiency refers to a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum.
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If the potential money multiplier in the U.S. is 5, then a $1,000 increase in demand deposits -- your earnings as a tutor in economics -- can potentially create demand deposits (including your $1,000 . of
a. $200 b. $500 c. $2,000 d. $5,000 e. $50,000
Figure 2-9
Assume that the publishing industry produces novels and textbooks, as shown in the production possibilities frontier in . Between points F and G, the opportunity cost of ten more novels equals __________. Between points G and H, the opportunity cost of ten more novels equals __________.
a.
0.4 textbooks; 0.5 textbooks
b.
4 textbooks; 5 textbooks
c.
4 million textbooks; 5 million textbooks
d.
2.5 textbooks; 2 textbooks
e.
10 million textbooks; 5 million textbooks
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.
Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the short run, we expect that the typical firm is likely to begin:
Select one: A. incurring an economic loss. B. experiencing neither an economic profit nor an economic loss. C. earning an economic profit. D. experiencing no change in its economic profit.