Use the above figure. The optimal position for the consumer is at
A. N.
B. J or L.
C. K.
D. M.
Answer: C
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Supply and demand analysis
A. can be used to understand solutions to pollution, but not causes. B. can be used to analyze how externalities lead to environmental problems. C. cannot be used to analyze pollution, which is a physical and chemical problem. D. cannot be used to solve the pollution problem, but can be used to analyze it.
The amount that individuals would have been willing to pay, minus the amount that they actually paid, is called:
a. producer surplus. b. consumer surplus. c. total surplus. d. demand surplus.
When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence?
a. Gas station owners anticipate consumers will buy more gasoline as gasoline prices increase. b. Gas station owners are attempting to repeal the laws of supply and demand. c. Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this higher expected cost. d. A decline in consumer demand generally causes gas station owners to raise their prices.
Suppose a hurricane hits Alabama, causing widespread damage to houses and businesses. The governor of Alabama places price ceilings on all building materials to keep the prices reasonable. Which of the following is the most likely result?
A. A faster recovery from the storm. B. The supply of building materials to Alabama will increase. C. More people will be able to purchase building materials. D. Shortages of building materials and a slower recovery from the storm.