Tophat questions

Which of the following statements about the effects of rent control is true?

A maximum price will cause a shortage of a good to be produced only it the maximum price is below the equilibrium price.

A decrease in the price of the good itself

A movement along a supply curve; no change in supply

For a firm, the short-run is defined as being __________.

A period of time in which at least one of the firm's inputs is unchangeable

production possibilities frontiers. Click on the graph where 'A' represents a higher than normal unemployment.

A production possibilities frontier showing high unemployment would show a location for the current economy as one that is below the production possibilities frontier, that is, one where more of both goods could be produced.

summarize the connection between opportunity cost, marginal cost and benefit, and rational decision-making.

A rational decision maker will choose to do something whenever the marginal benefit exceeds the marginal cost. Such a decision makes the decision maker better off. The marginal cost of doing something is the opportunity cost - the value of the best forgone alternative

An increase in the demand for a product will cause which of the following to happen to the wages of labor used in the production of the product?

An increase in wages and an increase in employment

Workers in an industry experience an increase in productivity. This causes what?

An increase in wages and an increase in employment

What does diminishing marginal productivity mean?

As you increase the amount of a variable input, its marginal product eventually gets smaller.

Monopolies will price discriminate when

At the current price, one group of consumers is elastic while another group is not as responsive (inelastic)

A firm engaged in predatory pricing will set its price in which of the following ways?

Below the average cost to drive out competition and then increase price

The monopoly and perfectly competitive firm are allocatively efficient.

False

If I have to drop out of college, it will cost me all of the tuition I have paid and the income I could have earned during those years while I was in college. True or false.

False. I did pay these costs, but they are sunk and thus not relevant to the decision.

What are two of the reasons that average cost tends to have a "bowl" shape?

Fixed costs tend to dominate low levels of output and variable costs tend to dominate high levels of output Because fixed costs do not change, average fixed costs will get smaller as output grows. This gives us the downward part of the "bowl." As output grows variable costs tend to increase (and if marginal costs are increasing, variable costs will grow faster than output) giving us the upward part of the "bowl."

Predatory pricing is:

Hard to distinguish from an industry in which firms are competing intensely and are discovering ways to lower average total cost.

When Jane's income doubles, she increases her consumption. For all normal goods that Jane consumes, what is true?

Her marginal utility per dollar will decrease As she increases her consumption of all normal goods, the marginal utility for each good will fall, causing the marginal utility per dollar to also fall.

A progressive income tax is likely to do which of the following?

Increase the percentage of income taxed as income rises

If a consumer is currently maximizing her satisfaction, what will happen to the marginal utility of a good when its price increases? The marginal utility will __________.

Increase, because the consumer will decrease her consumption of the good.

An increase in the prices of inputs will cause the equilibrium price to ______________ and the equilibrium quantity to ______________.

Increase, decrease

In an industry, the supply of workers is perfectly inelastic. The price of the good created increases. The market wages will ______________ and the marginal revenue product of labor will ______________.

Increase; increase

When the demand for milk shakes increase, the price of milk shakes will ______________ and the demand workers who milk cows will ______________.

Increase; increase

n the short run, an increase in wages (the price of the variable input) will cause average cost to ______________ and marginal cost to ______________.

Increase; increase Variable costs are part of average costs and marginal costs. Thus, both will increase.

Assume the price of coffee increases. If the market for tea is perfectly competitive and a constant cost industry, what will happen to the tea market in the long run? Output will ______________; prices will ______________; and economic profits will ______________ Indicate whether increase, decrease, cannot tell, or no change as before the price shift is correct for each blank space.

Increase; not change; not change

The demand for bicycles increases. This causes the wage for bike sellers to __________ and the wage for bike mechanics to __________.

Increases; increase

Tesla is building a car battery factory in Nevada to drastically increase their production capacity from where it is now. Since the factory has not opened, Tesla is __________.

Increasing its production possibility frontier

What would increase the efficiency loss of a progressive income tax?

Labor supply gets more elastic as income rises

Economic profits are ______________ than accounting profits.

Less than

What is the main source of diseconomies of scale?

Limited ability to manage and coordinate larger amounts of inputs

What will happen to current purchases if people expect lower prices in the future? What will happen with expectations of higher incomes?

demand decreases, demand increases

Increasing marginal cost is a direct result of __________.

diminishing marginal returns

In a perfectly competitive industry, the industry demand curve is __________.

downward sloping

Which of the following is a characteristic of perfect competition?

easy entry for firms

There have been recent talks about increasing spending on highways and roads. What component of GDP would that affect?

government spending

hink back to our discussions of changes in total revenue and price and how the concept of elasticity was used. When a firm decreases price and demand is elastic, the percentage change in quantity demanded will be A) ______________ (greater than / less than) the percentage change in price. Therefore, revenue will B) ______________ (increase / decrease). If the demand is inelastic, total revenue will C) ______________ (increase / decrease) when price decreases.

greater than, increase, decrease

In the long run, a monopolist facing the same cost curves as a perfectly competitive firm will charge a ______________ price than the competitive market and produce a ______________ output.

higher, lower

In the last few years in the U.S., have imports been greater than or less than exports?

imports have been greater than exports, resulting in negative net exports

Is the demand for a container of salt likely to be inelastic or elastic? Why?

in elastic because salt is a necessary dietary component inelastic because most people salt is a very small part of their budget

Copyrights on movies, books, and music act as a barrier to entry in order to give people what?

incentives to create

An increase in the prices of an input will cause long-run average costs to _______.

increase

A business should ___________ (increase/decrease) the price of a good with an inelastic demand if it wants to increase revenues.

increase a change in the price leads to a less than proportional change in quantity, so the effect of the price change is greater than the quantity change. If price increases, revenue increases. If price decreases, revenue decreases.

If the quantity of an input is variable in the short run, its total cost will ______________ as output increases.

increase The use of a variable input increases as output increases. Therefore, its total cost increases as output increases (you have to buy more).

"Some people predict, however, that the prices of chocolate will increase drastically in about three years because of some unhealthy crops." Given this expectation for the future, what will happen to the demand for chocolate now? What will the demand do?

increase as consumers buy more now to avoid higher prices later

An increase in technology will cause the total product function to ______________ and average costs to ______________.

increase, decrease

An increase in an effective maximum legal price will do what to prices and quantities actually sold in a market? Prices will __________ and the quantities actually sold will ___________.

increase, increase

If the price of a normal good decreases, the substitution effect ______________ the quantity of that good.

increases

A criticism of the current Social Security program (in the U.S.) that focuses on its equity implications is that it is

is funded by a regressive tax

Which of the following best describes how the unemployment rate is calculated?

is unemployed divided by labor force. The labor force includes those people who either have a job or a looking for a job. It does not include people who want a job but have stopped looking for a job.

During times of low employment, some people get discouraged, stop looking for work, and go back to school. How does going back to school affect the labor force?

it decreases the number in the labor force

If the income elasticity of a good is 0.8, what do we know about the good

it is a normal good With respect to income elasticity of demand, if the measure is positive, it is a normal good - i.e., income is increasing and quantity demanded is also increasing.

In Section 13.5, we saw that farm subsidies generally lack an economic justification. What are the unintended consequences of these subsidies? The quantity of goods produced with the subsidy is ______________ and efficiency is ______________ than the market without a subsidy.

too high; lower

In the short run, how will an increase in demand affect the output of a typical firm in a competitive market?

an increase in output

If the price of a good falls and, because of the income effect, consumption of the good also decreases, we know that the good is ______.

an inferior good

Regulators of a natural monopoly concerned most with the monopoly's profits will set prices equal to ________.

average cost

Inflation means that which of the following is true?

average price levels are increasing refers to periods of time with generally rising prices

if demand is elastic...

consumers are very responsive to price changes, so the quantity change will outweigh the price change.

if there is a shortage then...

consumers will be willing to pay a higher price in order to guarantee that they receive the good and the remaining sellers will be able to charge higher prices and still sell all of the quantity supplied that they would like to.

The slope of a firm's production function will ______ as the amount of a variable input used increases if the input experiences diminishing marginal productivity.

decrease Diminishing Marginal Product implies that the changes in output (rise) will get smaller while the changes in labor use (run) remain the same. So, slope will decrease.

An increase in interest rates will cause which of the following?

decrease the use of capital

A firm's long-run total cost curve is ________.

uploading sloping

The government is most likely to impose a tax on a good with a

very inelastic demand

Is it possible to have allocative efficiency without technical efficiency?

yes

does perfect competition. monopolistic competition, oligopoly, and monopoly have economic profits in the short run

yes

Does GDP include the purchase of a haircut?

yes GDP includes all goods AND serviced produced in a year. A haircut is a service, so it is included in GDP calculations.

if demand is elastic and you want revenue to increase

you should lower price since the quantity increase will outweigh the price decrease.

What are economic profits at a firm's break-even point?

zero

A pizza parlor can make 100 pizzas in an evening. They make 40 pepperoni pizzas and 60 extra cheese pizzas. 100 people order pizza, but 50 people would like a pepperoni pizza and 50 would like an extra cheese pizza. This pizza parlor is what?

Technically efficient, but not allocatively efficient nor economically efficient

Suppose you work for the FTC and have been asked to assess whether the FTC should build a case to block a proposed merger. whatwould be evidence in favor of blocking the merger?

The HHI index will increase a great deal The combined company plans to shut down about half of its locations many of which are currently profitable. There are high barriers to entry in the industry Both companies have very high accounting profit compared to revenue

The marginal product of labor (MPL) can be defined as which of the following?

The change in output level as the result of hiring another worker

A decrease in income will cause which of the following to happen to the demand for used cars? Assume used cars are inferior goods.

The demand for used cars will increase.

Regarding input choices, how would a firm respond to an increase in the wage rate?

The firm would use less labor and more capital.

Regarding perfect competition, what does it mean when the goods sold by the firms in a market are homogeneous?

The good sold by one firm is a perfect substitute of the good sold by another firm in the same market.

Which of the following is true when comparing tariffs and quotas?

The government will likely gain more revenue with a tariff than with a quota.

Inflation measure is ______________, while deflation measure is ______________.

The increase in price of a typical bundle of goods / the decrease in price of a typical bundle of goods.

Consider the market for loans. Suppose that the government institutes a new program to incentivize people to save more. What will be the impact on the interest rate and the quantity of loans borrowed?

The interest rate will fall and the amount borrowed will rise.

what is the largest source of personal income for residents of the U.S.?

Wages and salaries

If the benefits (correctly defined) of a doing something are greater than the costs (correctly defined) of doing whatever it is, what should one do?

We should always make the decision to do it. If the benefits of doing something else are greater, then that is part of the cost and that makes the cost greater than the benefits.

In the long run, the monopolist ______________ (will/will not) produce a quantity where average cost is at a minimum, whereas the perfectly competitive firm ______________ (will/will not) produce that quantity.

Will not; will

OPEC is an example of __

a cartel

If a glass of water costs less than a movie ticket,

a satisfaction-maximizing consumer will have a lower marginal utility gained from water than from movies.

If the government imposes an effective price ceiling in a market, what will be the result?

a shortage Since the price ceiling is below the equilibrium price, it means that the price cannot rise above that level. At the price ceiling, there will be more demand for this good than producers are willing to supply. Therefore, there will be a shortage.

The typical measure used to calculate inflation is CPI. CPI uses what to calculate price levels?

a typical basked of goods purchased by consumers

Common resources are used too ______________ for economic efficiency because the marginal cost of using the resource is ______________ than if the resources were private goods.

quickly; lower

GDP calculated using base year prices is called ______________ GDP.

real

Suppose you know that the price elasticity of demand for your product is 0.5, and you are thinking about raising your price by 8%. How much can you expect quantity to decrease?

4%

A company produces reuseable water bottles. If they hire one worker that worker will produce 10 water bottles in an hour, if they hire a second worker both workers will produce 16 total water bottles in an hour, and if they hire a third worker they will all produce 18 total water bottles. What is the marginal benefit of hiring the second worker?

6

Which situation would be labeled a "natural monopoly"?

A firm has large economies of scale, and is thus able to sell the good for a lower price than would if there were many firms.

What is a reason that monopolies exist?

A firm owns a resource that no one else has A firm is given legal protection that prevents another firm from entering A firm naturally drives out competitors through lower prices.

For any firm, what is the long-run average cost curve?

A function which shows the lowest average cost of producing any output level

When parents say, "My child is very intelligent, but he just doesn't try. My child would rather play video games than study." The child is _______.

Allocatively efficient, but not technically efficient

Assuming a good is a normal good, a decrease in price will lead to a substitution effect that does what?

Along with the income effect, increases quantity

Which of the following is true of an economic model?

An economic model is anything that makes simplifying assumptions in order to make complex economic ideas or problems more understandable.

Sales taxes are what?

An important source of revenue for state and local governments but not very important for the Federal government in the U.S.

An increase in the price of the good produced with capital will cause which of the following?

An increase in demand for that capital

If population increases in a city with effective rent controls (and nothing else changes), which of the following describes what will happen in the market for rental housing?

An increase in demand, but no change in quantity supplied. rent control is a price ceiling, meaning that price is not allowed to rise. Therefore, demand will increase, but supply will not since price is capped at the ceiling.

In the short run, how will a decrease in variable costs affect the output of a typical firm in a competitive market?

An increase in output

A tariff will cause what to happen?

An increase in the price the consumer pays for the imported good and an increase in the price of similar domestically produced goods.

Which of the following descriptions best characterizes common resources?

Common resources are those where it is hard to keep non-payers from using the good, and their use of the good negatively impacts others' ability to use it.

A government may impose a price ceiling if which of the following is true?

Consumers can persuade legislators that lower prices are needed

In the recent past, the government has attempted to stimulate the economy by sending tax refunds to individual people so that they will buy more products. What component of GDP is the government attempting to increase?

Consumption

In the case of an increase in fixed costs, what will happen to the economic profits of the typical competitive firm? Economic profits will ________.

Decrease

Most observers would claim that a regressive income tax will ______________ equity.

Decrease

A decrease in variable costs will cause the monopoly to do what?

Decrease the price

Assume a constant-cost industry in a competitive market. What are the long-term effects of the following change? A decrease in variable costs in the long run will cause the equilibrium price to ______________ and the equilibrium quantity in the market to ______________.

Decrease; increase by more than in the short run

If the labor force increases, but the number of people unemployed stays the same, what happens to the unemployment rate?

Decreases

If the price of a normal good increases, the income effect ______________ the quantity of that good.

Decreases

When the price of a good increases, consumer surplus ________.

Decreases

Assume that tastes change so that tennis is no longer as desirable to play as it is now. What would happen to the market for tennis balls?

Demand decreases, the equilibrium quantity is smaller, and the price is lower.

How will an increase in the price of DVDs affect the demand for DVD players? Why?

Demand for DVD players decreases

A long-run average cost curve that rises through all levels of possible outputs represents which effect?

Diseconomies of scale

In a model with only labor and capital as inputs, in the short run the amount of ______________ is fixed, while in the long run the amount of ______________ is variable.

Either labor or capital, both labor and capital

Marginal revenue is only positive when demand is _______.

Elastic

A property tax is likely to do which of the following?

Encourage homeowners to consume less than the allocatively efficient amount of housing

Mergers can sometimes be socially beneficial if they do which of the following?

Enhance the quality of the products

In the long run, a monopolistically competitive firm will produce where price _________.

Equals average cost and is greater than the marginal cost

if (1) the cost of manufacturing computers decreases and (2) at the same time the quality improves, making computers more useful for households, which of the following is most likely to happen?

Equilibrium price may increase or decrease; equilibrium quantity will increase

Which of the following is a cause of diminishing marginal productivity?

In the short run, labor runs out of available capital as more labor gets added to the production process.

Workers in an industry increase their education; this will do what?

Increase the demand for workers

An effective price ceiling in a competitive industry will mean that which of the following is true?

Marginal cost is equal to marginal revenue.

A profit-maximizing monopoly will produce where which of the following is true?

Marginal revenue is less than the priceMarginal revenue is equal to the marginal cost Marginal revenue is positive

When a firm holds all other inputs fixed and increases the amount of labor it employs, what will happen to the marginal revenue product of labor?

Marginal revenue product decreases

If a monopoly increases the quantity above the profit-maximizing level, what would happen?

Marginal revenue will be lower than before Marginal cost will be greater than marginal revenue Price would decrease

If David buys more coffee and less ice cream, the ______________ of coffee will ______________ , and the ___ of ice cream will ______________.

Marginal utility; fall; marginal utiity; rise As consumption of a good increases, its marginal utility falls. The reverse is true as well. So if more coffee is consumed, the marginal utility of coffee falls. But as less ice cream is consumed, its marginal utility increases.

Clear skies and clear rivers are scarce goods. True or false?

Maybe, but only if they are in those areas of the world where we may have to give something else up in order to enjoy clear skies or clear rivers.

Suppose you have two choices for a financial investment. One is a company that expects to earn $10 per share per year - the Atlanta Bread Company. The other, the Chicago Bakery Company, has a 50 percent chance of earning no profit and a 50 change of earning $20 per share per year. If they were the same price, which one would you prefer? Why? Which one do you expect most persons to prefer?

Most people would prefer ABC, as there is less risk. Both will pay the same amount over time.

If a monopoly faces a demand curve that is downward-sloping, then marginal revenue will be which of the following?

Must be less than price

Assume that competitive firms and a competitive market are in long-run equilibrium. In the short run, what will be the effects of an increase in fixed costs on the output of a typical firm in a competitive market?

No change in output

Unemployment occurs when there is a surplus of workers in a labor market. If the market is in equilibrium, can a surplus exist?

No, since quantity demand is the same as quantity supplied.

GDP calculated using current year prices is often called ______________ GDP.

Nominal

What is the difference between nominal and real wages?

Nominal wages have not been corrected for inflation and real wages are corrected for inflation.

Assume a constant-cost industry in a competitive market. What are the short-term effects of the following change? An increase in fixed costs will ______________ the equilibrium price and ______________ equilibrium quantity in the market.

Not change; not change

Why do barriers to entry allow a monopolist to make positive economic profits?

Otherwise, firms would enter the market, resulting in a decrease in price and profits.

Suppose a firm doubles its inputs (therefore doubling its total costs as well). If this firm is experiencing diseconomies of scale, then __________.

Output will increase, but less than double

Accounting profits at a firm's economic profit break-even point are ________.

Positive

An increase in the marginal product of capital does what to the price and quantity of capital? Why?

Price and quantity will increase.

A monopolistic competitive firm will incur loss when

Price is lower than average total cost

Which of the following does not cause a change in demand?

Price of the good

Demand for coal decreases. If nothing else changes, what will happen to the price of the machines used to extract coal and the quantity of machines bought and sold?

Price will decrease, quantity will decrease.

An increase in the cost of producing capital will do what to the price and quantity of capital produced? Why?

Price will increase and quantity will decrease.

What is the equation to determine the number of workers a firm should hire?

Price x (marginal productivity of labor) = wages

Which of the following descriptions best characterizes public goods?

Public goods are those where it is hard to keep non-payers from using the good, but their use of the good does not negatively impact others' ability to use it.

If the unemployment rate in the United States is 4% (or around full employment), what is likely happening to real GDP?

Real GDP is growing at expected rates

Of the measures discussed in this chapter, which is the best measure of the average individual's well-being.

Real GDP per capita

A sales tax is normally viewed as a __________.

Regressive tax

In the long-run, what will diminishing marginal returns be?

Relevant if one input is changed while the other input is held constant or reduced

The creation of a quota on Canadian softwood lumber sold in the U.S. may affect prices and quantities of Canadian softwood lumber sold in the U.S. and the prices and quantities of U.S. softwood lumber sold in the U.S. Assuming that the quota is set at a level lower than the current level of imports, the resulting equilibrium price paid by consumers in the imported Canadian softwood lumber market will ______________.

Rise

Variable cost ______________ while fixed cost ______________ as output ______________ in the short run.

Rises, stays the same, increases

In every economy, resources are limited, but wants are large and increasing. What is this condition called?

Scarcity, the condition that our wants are greater than our abilities to satisfy them, forces us to make choices among competing uses of resources.

A tax on the land used by the producer

Shift the supply curve to the left; a decrease in supply

Expectations of rising prices of the good in the near future

Shift the supply curve to the left; a decrease in supply

A decrease in the price of an input¸ such as wages for labor

Shift the supply curve to the right; an increase in supply

A decrease in the price of another good firms in the industry could produce

Shift the supply curve to the right; an increase in supply

If the U.S. has an absolute advantage in the production of software and the production of computers when compared to Mexico, but has a comparative advantage in the production of software, what should it produce?

Software and let Mexico produce computers

n efforts to increase economic efficiency, governments should ______________ public goods.

Subsidize

How does an decrease in input costs affect suppliers?

Supply increases

If interest rates increase, what is likely to happen to the marginal product of capital?

The marginal product of capital will rise.

If the unemployment rate decreases, which of the following is true?

The number of people looking for work decreased and the number of people with jobs increased by even more. The number of people employed increased but the number of people looking for work stayed the same. The number of people unemployed stayed the same but the labor force increased.

Why are perfectly competitive markets are considered economically efficient?

The opportunity cost of society for making the good is equal to society's value of the good.

Why is the purchase of a share of stock not included in GDP?

The purchase of a share of stock does not correspond to the production of a good or service.

A production function can best be described as which of the following?

The relationship between the quantity of inputs and quantity of outputs produced in a given amount of time

If the government taxes car producers, that will happen in the market for cars?

The supply curve will shift to the left. A tax on producers represents an increase in the cost of doing business, so supply would decrease, shifting the curve to the left.

Suppose that lenders become more confident about future economic conditions and decide to increase their loans now. What will happen in the market for loans?

The supply of loans will increase.

Good economic decision-making means which of the following?

Thinking about marginal benefits and marginal costs of the good and services

Suppose a firm doubles its inputs in the long-run, and as a result, output doubles. Which of the following is true?

This firm is experiencing constant returns to scale.

How is real GDP measured?

Total of all final goods and services produced in the U.S. valued at a base year's prices

Consider a good produced in a competitive market, but one with external benefits. The market price will result in too ______________ of the good for economic efficiency. The market price will be ______________ than the price that would convince producers to produce the efficient amount.

little; lower

Economies of scale happen when increases in output result in _________.

lower average costs

If you were selling a product with an elasticity of 1.6 and you wanted to increase your revenue, what should you do to the price?

lower price

Compared to a perfectly competitive market, a natural monopolist will have a.) ______________ (higher / lower / either higher or lower) average costs and may charge a b.)______________ (higher / lower / either higher or lower) price.

lower, either higher or lower

Once a government has introduced a proper (that is, economically efficient) policy to address the market failure, the price of a good that has external benefits will be ______________ than its free market price and the price of a good that has external costs will be ______________than its free market price.

lower; higher

Demand curves in competitive markets represent which of the following?

marginal benefit to consumers

Regulators of a natural monopoly concerned most with economic efficiency will set prices equal to ________.

marginal cost

highest profit level? (which market)

monopoly

Rank each type of market on their prices from highest to lowest.

monopoly, oligopoly, monopolistic competition, Perfect Competition

Because technology has made workers able to create more output for the same amount of time, a firm's profit increases and it wants to increase its current output. But the firm finds that it must pay ______________ to hire workers.

more because demand for workers increases

The price elasticity of demand will be _________________ if demand is elastic.

more than one a change in price will cause a greater change in quantity. Specifically, a given percentage change in price will cause a larger percentage change in quantity demanded. Since price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price, the price elasticity of demand will be greater than one.

Compare the following two situations. In the first, gasoline prices alone rise from $2.50 per gallon to $4.00 per gallon. In the second, prices of most goods and services - including gasoline prices -- increase by 4 percent. Which of those situations represents inflation in an economy?

only the second situation Inflation is when average prices increase or prices of most goods increase. While the rise in gasoline prices might be of serious concern, it does not represent inflation spread across the entire or most of the economy.

GDP divided by the number of people in the country is called GDP ______________.

per capita, per person

sellers act as price takers

perfect competition

Rank each type of market on their industry quantities from highest to lowest.

perfect competition monopolistic competition oligopoly monopoly

An example of price controls given in your text concerns minimum wage increases. On a supply and demand diagram (with wages on the vertical axis and number of workers on the horizontal), would minimum wage be considered a price ceiling or a price floor?

price floor

A single firm in a perfectly competitive market is a _________.

price taker

In the figure above, if a monopoly charged the price of F and produced the monopoly quantity, then there would be a(n) ________.

shortage

In efforts to increase economic efficiency, governments should ______________ goods with external benefits.

subsidize

The addition of a single firm in a competitive market will cause the market ______________ to ______________.

supply; increase

In efforts to increase economic efficiency, governments should ______________ common resources.

tax

In efforts to increase economic efficiency, governments should ______________ goods with external costs.

tax

consumer surplus

the area of the triangle formed by the demand curve and the price. Extending the demand relationship above,

To pay for a public good that not everyone uses, the most equitable tax for most people is likely one that is based on _____________.

the benefit principle

For a firm in a perfectly competitive market, average revenue equals ________.

the market price

Which of the following is likely to have the largest elasticity of supply? the producer of vanilla ice cream the producer of yachts a dentist

the producer of vanilla ice cream It is far easier for a producer of vanilla ice cream to react and change production if the price of vanilla ice cream changes than it is for a dentist or someone who builds yachts.