When a negative externality is present in a market, total surplus is:
A. lower when buyers only consider private costs.
B. lower when buyers consider social costs.
C. higher when buyers only consider private costs.
D. None of these statements is true.
Answer: A
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Refer to Figure 14-5. Does it make sense for Netflix to lower its price in order to deter Spotify's entry into the streaming video market?
A) yes, because it is always profitable to remain a monopoly B) yes, because Netflix stands to make a profit of $7 million by lowering its price and keeping Spotify out of the market C) no, because Spotify will enter the market regardless of Netflix's decision about its subscription price D) no, because Netflix will make a higher profit by keeping its subscription price unchanged, whether Spotify enters the market or not
Assuming that households do not change their cash holdings and banks loan out all of their excess reserves, if the required reserve ratio (RRR) is 20 percent and the Fed purchases $2,000 worth of bonds from banks, how much money will be eventually created?
a. $1,800 b. $2,000 c. $10,000 d. $18,000 e. $20,000
The Great Depression was made more severe because
A) the government lowered tariffs against imported goods. B) the Federal Reserve increased the money supply after the stock market crashed. C) depositors made runs on banks, thereby destroying the banking system in large parts of the nation. D) depositors left their money in banks instead of increasing spending, which would have increased GDP.
Explain why the price elasticity of demand varies along a demand curve, even if the demand curve is linear
What will be an ideal response?