When a taxed good is normal, using the (uncompensated) demand curve to estimate deadweight loss will over-state the actual deadweight loss.
Answer the following statement true (T) or false (F)
True
Rationale: Yes, because the MWTP curve is steeper when a good is normal.
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People buy more of good 1 when the price of good 2 rises. These goods are
A) complements. B) substitutes. C) normal goods. D) inferior goods.
When the economy goes through ups and downs over time:
A. it is not reflected by changes in GDP growth. B. economists call this pattern the business cycle. C. it affects the supply of labor. D. All of these are true.
When can a seller's investment in reducing transaction cost increase the price of the product to customers but still leave them better off?
Which of the following refers to the positive or negative effect on parties who are not directly involved in a transaction?
A. Consumption effect B. Externality C. Incentive distortions D. Invisible hand