Ken values his boat at $5,000, and Monica values it at $8,000. If Monica buys it from Ken for $7,000, which of the following is true?
What will be an ideal response?
Ken gains $2,000 of value, and Monica gains $1,000 of value.
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If factor prices rise as demand increases and the firms expand output, the long-run market supply curve will be upward sloping. In terms of economics, this describes
a. an oligopolistic industry. b. a constant cost industry. c. an increasing cost industry. d. a decreasing cost industry.
Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the supply of labor, a major new discovery of oil, and new environmental regulations that raise the cost of electricity production. In the short run
a. the price level will rise and real GDP will fall. b. the price level will fall and real GDP will rise. c. the price level and real GDP will both stay the same. d. All of the above are possible.
As the economy expands, tax revenues
A. rise and transfer payments rise, causing the economy to expand by more than it would in the absence of automatic stabilizers. B. fall and transfer payments rise, causing the economy to expand by less than it would in the absence of automatic stabilizers. C. rise and transfer payments fall, causing the economy to expand by less than it would in the absence of automatic stabilizers. D. fall and transfer payments fall, causing the economy to expand by more than it would in the absence of automatic stabilizers.
An emissions fee equal to the optimal Pigouvian tax on coal has the effect of _____________ the externality associated with the burning of coal, while ensuring that the marginal benefit of pollution _________ the marginal cost of pollution.
a. worsening, equals b. lessening, is greater than c. internalizing, is less than d. internalizing, equals