Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C). Which of the following changes would cause the equilibrium to change to point B?
A) a positive change in the technology used to produce motorcycles and decrease in the price of motorcycle insurance, a complement to motorcycles
B) an increase in the number of motorcycle producers and an increase in the number of consumers who prefer riding motorcycles
C) an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance, a complement to motorcycles
D) an increase in the wages of motorcycle workers and a decrease in the price of motorcycle insurance, a complement to motorcycles
D
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Money prices are an extremely effective device for promoting social cooperation because
A) most people want money more than they want anything else. B) people are basically selfish. C) scarcity can be eliminated through appropriate changes in money prices. D) they don't change rapidly when circumstances change. E) they help to clarify the options available to people.
Two cities A&B are deciding upon joint pollution laws. Right now they both face identical prices for their housing. If they decide that city A is to be a pollution free city "Clean town" and all the factories would locate in city B "Smogville", in the long run, we expect to see
a. Asthmatics moving to Smogville b. Poorer families moving to Cleantown c. Residents in both the cities relocating based on their tolerance for pollution d. Residents in both the cities being worse off
The main reason the usefulness of Pareto optimal policies is limited as a policy guide is that:
A. it is too subjective. B. real-world changes in which more people are helped than are harmed are rare. C. real-world changes in which no one is harmed are rare or nonexistent. D. it is only objective, and good policy also requires a subjective element.
When the Fed is targeting the money supply, it has complete control over the interest rate
a. True b. False Indicate whether the statement is true or false