The figure below shows the supply and demand curves for jeans in Smallville. 
The equilibrium price will NOT lead to the largest possible total economic surplus if:
A. there are diminishing returns in the production of jeans.
B. jeans are purchased by consumers with reservation prices greater than $40.
C. the production of jeans generates air pollution.
D. the market for jeans is perfectly competitive.
Answer: C
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If the size of the capital stock in an economy is stationary, ________.
A. gross investment is zero B. GDP is zero C. net investment is zero D. capital consumption (or depreciation) is zero
Economic theory can predict or explain behavior
A) in the private but not in the public or government sector of society. B) most successfully in areas where behavior is largely guided by foresight and planning. C) only when behavior aims at maximizing net monetary revenue. D) when people behave selfishly rather than in the public interest.
"Public goods" are provided by the public sector as a matter of social choice, not economic necessity
Indicate whether the statement is true or false
A consumer's indifference curves are straight lines when, for the consumer, the goods in question are __________
Fill in the blank(s) with correct word