Which of the following is most consistent with the basic postulate of economics: changes in incentives exert a predictable impact on human behavior?
a. Farmers produce fewer bushels of wheat in response to an increase in the price of wheat.
b. People will buy more milk at a price of $3 per gallon than at $2 per gallon.
c. People will buy less gas if the price of gas increases by $0.50 per gallon.
d. People will consume more beef if the price increases from $1 to $2 per pound.
c. People will buy less gas if the price of gas increases by $0.50 per gallon.
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The free-rider problem refers to those who ride on public transit systems without paying.
Indicate whether the statement is true or false.
When a few rival groups spend money in competition for a license that grants them a monopoly for the provision of cable TV for an area, economists label this activity
A. perfect competition. B. oligopoly. C. monopolistic competition. D. rent seeking.
Free trade may lead to more pollution because
A. with free trade, the size of the economy increases resulting in higher production and consumption. B. competition among nations invariably leads to less restrictive pollution standards. C. imported products are produced using cleaner production techniques than domestic products. D. the countries may not specialize in the production of goods in which they have comparative advantage.
If Ewan is consuming his utility maximizing bundle and the price of one good falls, what happens to the marginal utility per dollar spent on this good (MU/P), and what should Ewan do?
A) MU/P has increased and Ewan should buy more of this good. B) MU/P has increased and Ewan should buy less of this good. C) MU/P has decreased and Ewan should buy more of this good. D) MU/P has decreased and Ewan should buy less of this good.