High gasoline prices give people all of the following incentives EXCEPT
A. to drive less.
B. to car pool.
C. to take vacations that require driving more miles.
D. to buy a hybrid car.
Answer: C
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A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $300, given the scenario described, the total consumer surplus would be:
A. $200. B. $170. C. $1,070. D. None of these is true.
Mrs. Smith is given a government subsidy for an apartment in a public housing project. The apartment
A) is not subject to the principle of rival consumption. B) is not a public good. C) has widespread benefits and concentrated costs. D) is subject to the free-rider problem.
When marginal cost is rising, average total cost is rising
Indicate whether the statement is true or false
Suppose Chip's Chips produces bags of potato chips. An example of a variable cost for this firm would be:
A. the factory building. B. the deep fryer. C. the potato peeling machine. D. None of these is an example of a variable cost.