Which of the following will not cause consumption, and as a result, aggregate demand, to increase?
a. an optimistic business forecast of future income growth
b. a tax cut
c. an increase in consumer confidence
d. a tax increase
d
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Which of the following goods will have the most elastic demand at any time?
a. coffee b. gasoline c. restaurant meals d. insulin
Which is a major criticism of a monopoly as a source of allocative inefficiency?
A. A monopolist fails to expand output to the level where the consumers' valuation of an additional unit is just equal to its opportunity cost B. A monopolist has no incentive to produce efficiently, because even the inefficient monopolist can be assured of economic profits C. A monopolist will always earns profits and that means that prices are too high D. A monopolist has an unfair advantage because it can purchase labor at a lower price than competitive firms can