Suppose that an economy is initially operating at a point on its PPC. If it then experiences an expansion in its production capacity, but its total spending does not rise as fast as its capacity, the economy will end up:
A. Still on its PPC
B. Outside its PPC
C. Inside its PPC
D. On one of the axes of its PPC
C. Inside its PPC
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A firm that produces chemical solvents creates some air pollution because of the emissions from its manufacturing facilities. A tax is imposed on the firm, equal to the costs of environmental damage caused by a unit of the emissions
What is the result? A) The quantity of chemical solvents produced now will be the efficient amount. B) Demand for the chemical solvents will increase. C) Demand for the chemical solvents will decrease. D) Consumers of the chemical solvents will be willing to pay the full amount of the tax, and so the quantity produced will be unaffected.
The law of diminishing marginal utility is consistent with the consumer behavior that produces a negatively sloped demand curve
a. True b. False Indicate whether the statement is true or false
For a given nominal exchange rate and domestic price level, a decrease in the foreign price level ________ the real exchange rate.
A. decreases B. offsets any change in C. may either increase or decrease D. increases
Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $12, producer surplus would:
A. increase from $8 to $12. B. increase by $4 for House Depot. C. increase by $7 in total. D. increase by $4 for each producer.