When compared to monopoly and monopolistic competition, the perfectly competitive market structure
a. has somewhat higher barriers to entry
b. produces the lowest output at the lowest prices
c. is the least efficient
d. gives the greatest output at the lowest prices
e. earns the highest normal profit
D
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The price elasticity of demand for cigarettes is 0.4. If government wants to reduce smoking by 10 percent, by how much should it raise the price of cigarettes by imposing a tax?
A) by 10 percent B) by 20 percent C) by 25 percent D) by 50 percent
Inflation: a. always reduces real income
b. never reduces real income. c. reduces the real income of workers when wages increase more than prices do. d. reduces the real income of workers when wages increase less than prices do. e. increases the real income of workers only when wages increase less than prices do.