What are the basic arguments of the classical growth theory?
What will be an ideal response?
The classical growth theory originated during the late 18th century. Although proposed by many leading economists of the time, it has most often associated with Malthus. The classical theory states that economic growth will be temporary. The reason why the growth is temporary is because any economic growth will lead to a population explosion. The growth in population increases labor hours, which lead to a reduction in capital per labor hour. Productivity declines until real GDP per person falls to the subsistence level where life is just sustained. At this point, economic growth ceases.
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In an oligopoly with differentiated products, firms ________
A) make positive economic profits B) incur losses C) earn zero economic profits D) do not face competition from its rivals
Which of the following quantities decrease in response to a tax on a good?
a. the equilibrium quantity in the market for the good, the effective price of the good paid by buyers, and consumer surplus b. the equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good c. the effective price received by sellers of the good, the wedge between the effective price paid by buyers and the effective price received by sellers, and consumer surplus d. None of the above is necessarily correct unless we know whether the tax is levied on buyers or on sellers.