Suppose that interdiction efforts have stemmed the flow of illegal drugs into the United States. If there is no change in demand, this leads to higher prices for these substances. The result is an increase in crime as users attempt to maintain their now more expensive habits. Economists would call this effect
A. the illusion of rationality.
B. an externality.
C. the cost disease of personal services.
D. inflation.
E. unemployment.
Answer: B
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Suppose two neighborhoods with 10 homes each in Buffalo, New York are identical except one of them is near a toxic waste dum
A) $400,000. B) $1,300,000. C) $900,000. D) $500,000. E) $90,000.
The binary dependent variable model is an example of a
A) regression model, which has as a regressor, among others, a binary variable. B) model that cannot be estimated by OLS. C) limited dependent variable model. D) model where the left-hand variable is measured in base 2.
Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,
a. any possible increase in consumer surplus would be larger than the loss of producer surplus. b. any possible increase in consumer surplus would be smaller than the loss of producer surplus. c. the resulting increase in producer surplus would be larger than any possible loss of consumer surplus. d. the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus.
A bundle:
A. is when a store sells goods at a discounted price. B. describes the amount of people that choose a particular combination of goods. C. is a curve describing different combinations of goods and services an individual could choose to consume. D. is a specific combination of goods and services an individual could consume.