Economic models have become much simpler in recent years
Indicate whether the statement is true or false
F
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The following graph applies to a consumer for whom good x is an inferior good. The price of x falls from p to p', and one of the curves below represents the consumer's (uncompensated) demand curve while the other represents the consumer's compensated demand (or MWTP) curve.
a. Which curve is which? (Explain.)
b. What is it about these curves that makes them intersect at the original price p?
c. Once the consumer has optimized at the new price p', illustrate the new (uncompensated) demand and the new MWTP curve. d. For curves that have shifted, explain why; for curves that have not shifted, explain why as well. What will be an ideal response?
The short-run supply curve for the perfectly competitive firm is the portion of its
A) MC curve above the AVC curve. B) MC curve above the AFC curve. C) MC curve above the ATC curve. D) MC curve above the MR curve.
When two variables repeatedly change at the same time, there must be a causal relationship between them
a. True b. False Indicate whether the statement is true or false
A corrective tax
a. allocates pollution to those factories that face the highest cost of reducing it. b. is a form of regulation. c. works well for all types of externalities. d. is inferior to regulatory policy according to most economists.