If we observe a decrease in the price of a good and an increase in the amount of the good bought and sold, this could be explained by
a. an increase in the supply of the good.
b. an increase in the demand for the good.
c. a decrease in the demand for the good.
d. a decrease in the supply of the good.
Answer: a. an increase in the supply of the good.
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Elimination of riskless profit opportunities in the futures market is
A) hedging. B) arbitrage. C) speculation. D) underwriting.
When negative spending shocks occur, transfer payments automatically fall
a. True b. False
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
The real-income effect of a price change is most significant when
A. the good under consideration constitutes a major portion of the consumer's budget. B. the marginal utility per dollar spent on the last unit is high. C. the substitution effect is significant too. D. the substitution effect is insignificant.