The economic way of thinking stresses that
a. greed is the primary motivation for human action.
b. as the benefits of an option increase, people will be more likely to choose that option.
c. an objective value can be attached to physical goods.
d. as the cost of an option decreases, people will be less likely to choose that option.
B
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Refer to Figure 16-11. If government purchases increase by $100 billion and lead to an ultimate increase in aggregate demand as shown in the graph, the difference in real GDP between point A and point B will be
A) more than $100 billion. B) less than $100 billion. C) $100 billion. D) There is insufficient information given here to draw a conclusion.
In a competitive market, the demand and supply curves are Q = 12 - P and Q = 5P, respectively. If output is fixed at Q = 5, what is the amount of the resulting deadweight loss?
A) 0 B) 5 C) 10 D) It cannot be determined without more information.
When price equals marginal cost
A) firms make zero profits. B) firms make positive profits. C) the industry is in long-run equilibrium. D) the marginal benefits of consuming an extra unit of the good exactly equals the marginal cost to society of producing the good.
Public policy, without intending to do so, can increase frictional unemployment
a. True b. False Indicate whether the statement is true or false