Beverly owns a rabbit and receives a $600 benefit from owning it. Sometimes Beverly's rabbit makes its way onto the lawn of her neighbor, Charles, and eats the vegetables in Charles' garden. This intrusion by the rabbit costs Charles $400 . Can both individuals become better off if Charles pays Beverly some amount of money to get rid of the rabbit? Explain
No, since Beverly would require a payment of more than $600 in order to become better off, while Charles could become better off only if he paid Beverly less than $400.
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Demand for a product is given by Q = 200 - P and supply is given by Q = 0.5P - 10. If the quantity demanded rises by 10 units at every possible price, then the equilibrium quantity will be
a. 40 units b. 50 units c. 60 units d. 100 units
If firms and workers could predict the future price level exactly, the short-run aggregate supply curve would be
A) downward sloping. B) horizontal. C) upward sloping. D) vertical.
If demand is price elastic, a decrease in price causes:
a. an increase in total revenue. b. a decrease in total revenue. c. no change in total revenue. d. an increase in quantity, but anything can happen to revenue.
Which statement is true?
A. On the production possibilities frontier, 85 percent of capital is employed. B. If we moved closer to the origin and further away from the production possibilities frontier, unemployment would increase. C. To have economic growth, we must push the production possibilities frontier outward. D. All of the statements are true.