The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 

The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is best to use to produce 60 units per day?

A) plant A B) plant B C) plant C D) plant D

Which of the following is a possible market solution to the lemons problem?

A) Producers might offer product guarantees and warranties. B) Producers might be required to meet certain legal standards to obtain licenses granting the right to sell their products. C) Government agencies might be charged with directly overseeing production and distribution of certain products. D) Liability laws might be established to ensure that firms selling certain products must face penalties in the event the products function poorly.