As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of
A. consumer sovereignty.
B. the income effect.
C. diminishing marginal utility.
D. the substitution effect.
Answer: D
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If a union is successful in negotiating a wage rate which is above the market clearing wage, then which of the following would not occur?
A) The higher wages attract more workers leading to a shortage of jobs. B) Management may replace part of the workforce with machinery. C) To handle the surplus of labor the union will form a closed shop. D) The union may shift the supply of labor curve by developing methods to ration jobs.
A government passes a new law allowing only 1,000 tons of pollution per day to be generated and simultaneously sells 1,000 transferable rights to emit one ton each of pollution per day. Which of the following is true?
a. The pollution will be created by those least willing and able to pay the damages. b. The pollution will be created by those most willing and able to pay for the right to pollute. c. The funds collected by the government will be enough to compensate any individuals harmed by the pollution. d. Pollution will increase from zero to 1,000 units per day.
If at current exchange rates it was cheaper to buy a product in country A than country B, the purchasing power parity theory would increase the relative exchange value of country A's currency
a. True b. False Indicate whether the statement is true or false
What is an aggregate? How is it used in macroeconomics? Give two examples of specific aggregates that are used in the study of macroeconomics