Use the figure below to answer the following question.What area represents tax revenue after the government imposes the excise tax on the market?

Plutonia uses the Taylor rule to set the short term interest rate at which banks lend to each other

Compute the short term interest rate that should be set in Plutonia if the inflation target is 2%, the long-term target for the interest rate is 3%, the current rate of inflation is 5%, and output is 5% below its trend.

Assume that one firm in a perfectly competitive market adopts a technological innovation that enables it to produce at a lower cost per unit than competing firms in the short run. Which of the following statements is correct?

a. The innovating firm will earn above-normal profit in the long run. b. All the competing firms will be forced to exit the market in the long run. c. This is an example of a decreasing cost industry. d. Competing firms will need to adopt the new technology in the long run in order to survive. e. Only new firms entering the industry with new-technology plants will be able to compete with the innovating firm.