Economist John Maynard Keynes is famous for saying, "In the long run, we are all dead." He is referring to the:
A. fact that no policy can affect the long-run equilibrium.
B. notion the economy is sure to collapse in the long run.
C. length of time it can take the economy to recover to potential GDP without policy intervention.
D. permanent inflation that results in long-run adjustments.
Answer: C
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The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. Producing and consuming the efficient quantity of coffee in Kaffenia means that
A) the marginal social cost of the last pound of coffee is at the lowest possible value. B) the marginal social benefit of the last pound of coffee is at its highest possible value. C) to produce more coffee, the marginal social benefit of an additional pound of coffee is less than its marginal social cost. D) All of the above are correct.
The supply curve of a natural resource like oil has a positive slope because
a. the supply becomes closer to exhaustion as demand rises. b. it becomes more costly to find and develop supplies as demand rises. c. rents rise as output increases. d. indirect taxes rise with output.