In this consumer surplus graph, why is the market demand curve smooth?
a. Demand is artificially set by government price controls.
b. One buyer sets the demand for the entire market.
c. The buyers all share identical levels of willingness to pay.
d. There are many buyers with unique levels of willingness to pay.
d. There are many buyers with unique levels of willingness to pay.
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A retired worker receives a pension that is not indexed to inflation. Which of the following will happen if the rate of inflation rises?
A) The retiree's purchasing power will fall. B) The shareholders of the firm in which he worked will lose. C) The retiree's purchasing power will increase. D) The retiree will be better off.
The income tax system serves as an automatic stabilizer over the course of the business cycle
Indicate whether the statement is true or false