Once a firm is made to internalize a negative externality, the price will
A. increase and output will decrease.
B. decrease and output will increase.
C. decrease and output will decrease.
D. increase and output will increase.
Answer: A
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
Over a particular price range, if the quantity effect of a price decrease is larger than the price effect, it implies that:
A) demand is inelastic in the price range. B) demand is elastic in the price range. C) the demand curve is vertical in the price range. D) the demand curve is upward sloping in the price range.
In the DuPont cellophane case, rivals accused DuPont of monopolizing cellophane. DuPont claimed that the relevant market was flexible wrapping material, such as wax paper and aluminum foil, rather than just cellophane. DuPont won the case. What type of evidence constituted DuPont’s defense?
What will be an ideal response?
Suppose that wages are higher in one geographic region (Region 1) of a country than in another geographic region (Region 2). Given free migration of workers,
a. wages in the two regions will become even more divergent. b. wages in Region 1 will rise. c. wages in Region 2 will rise. d. employment in Region 2 will rise.