Suppose a country has no trade with other countries and people can borrow as many funds as they want at the current interest rate. An increase in the price level will generate
A) a decrease in total planned real expenditures because of the real-balance effect.
B) a decrease in total planned real expenditures because the indirect effect will be stronger than the real-balance effect.
C) a decrease in total planned real expenditures because the real-balance effect will be stronger than the indirect effect and the open-economy effect.
D) a decrease in total planned real expenditures because of the open-economy effect and the indirect effect.
A
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Suppose a firm produces its output in two different plants. Production costs at plant 1 are given by C1 = 4(Q1)2, where Q1 is the amount of production at plant 1. The production costs at plant 2 are given by C2 = 2(Q2)2, where Q2 is the amount of production at plant 2. The corresponding marginal costs at each plant are MC1 = 8Q1 and MC2 = 4Q2. If the firm produces a total of 24 units of output, how much output should it produce at each plant?
What will be an ideal response?
Buyers will bear the entire burden of a unit tax if the demand curve for a product is
A) upward sloping. B) horizontal. C) downward sloping. D) vertical.