A rise in stock prices ________ the net worth of firms and so leads to ________ investment spending because of the reduction in moral hazard
A) raises; higher
B) raises; lower
C) reduces; higher
D) reduces; lower
A
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Suppose a tax is imposed on sellers. The more inelastic the demand for the taxed item, the
A) greater the share of the tax paid by sellers. B) smaller the deadweight loss from the tax. C) larger the decrease in consumption because of the tax. D) All of the above answers are correct.
Production that generates positive externalities typically produces _______ than the socially optimum and this is because benefits to ________ are not taken into account by the market
a. more; free riders b. less; free riders c. less; government d. more; government e. more; antipolluters
Suppose goods A and B are complements. If the price of good A increases, will the demand for good B increase or decrease?
Which of the following is one of the functions of rental prices?
A) to redistribute income from landlords to renters B) to redistribute income from renters to landlords C) to signal to the local government when taxes on rental units should be increased D) to ration the use of existing housing for current consumers