Suppose the government has declared beer to be an illegal substance and imposes a fine on any person caught selling a beer. Buying beer, however, remains legal
Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect? A) $5 per quart and 300 quarts of beer
B) $3 per quart and 500 quarts of beer
C) $3 per quart and 100 quarts of beer
D) $1 per quart and 300 quarts of beer
A
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The base year matters for the computation of real GDP because
A) otherwise we cannot compute growth rates. B) relative prices can change over time. C) it allows an international comparison of GDP. D) it establishes a target for macroeconomic policy.
Downsizing can be represented by
a. moving to a point on the left along the LRATC curve b. moving to a different short-run ATC curve on the right c. remaining on the same short-run ATC curve d. a downward shift in the LRATC curve e. an upward shift in the LRATC curve