Consider a Simple Macro Model with a Constant Price Level

question 36

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.If national income is above its equilibrium level,it is likely that inventories are ________,and so national income tends to ________.

• A)accumulating; rise
• B)accumulating; fall
• C)being depleted; rise
• D)being depleted; fall
• E)constant; fall

Analyze the effects of external factors on the efficient provision and consumption of goods.

Examine strategies for managing common resources and public goods, including Pigouvian taxes, tradable licenses, and property rights.

Appreciate the challenges in achieving social optimality in the provision of public goods and common resources.

Recognize the implications of individual behaviors on group projects and collective outcomes.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing to purchase.

Constant Marginal Cost

Describes a situation in production where the cost of producing an additional unit of output is the same, regardless of the level of production.

Profit-Maximizing

A strategy or point where a firm achieves the highest possible profit based on its production and selling activities.

Monopolist

A person, company, or entity that holds exclusive control over the market for a particular good or service, without competition.