People derive utility in their lives from consuming goods (all other goods), g, and clean air (measured as the number of particulates removed per m3), a, as measured with the utility function U(g,a) = g0.6a0.4. The price index of consumer goods equals $20 per day. Income equals $1000. What is likely to happen to the number of asthma cases as the price of clean air (abatement cost) increases from
$10 to $20?
A) Asthma cases decrease because the particulates per m3 increase by 2 units.
B) Asthma cases increase because the particulates per m3 decrease by 2 units.
C) Asthma cases increase because the particulates per m3 increase by 2 units.
D) There is not enough information to answer this question.
C
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Economically speaking, the design of Medicare
A. helps to decrease the cost of care to non-Medicare patients. B. discourages the provision of medical services. C. encourages the consumption of medical services. D. discourages the consumption of medical services.
The difference between the gross public debt and the net public debt is
A. the sum of all previously accumulated government budget deficits and surpluses. B. all private-sector borrowing from private sources. C. the sum of all previously issued U.S. government securities that have been purchased by foreign residents. D. borrowing of government agencies from other government agencies within the nation.
Assume that the marginal cost of producing steel does not include the cost of the damage to the environment as a result of pollution. By producing where P = MC, the firm will be producing
A. more than the efficient amount of steel. B. less than the efficient amount of steel. C. the efficient amount of steel. D. a zero quantity of steel.
In Macroland there is $1,000,000 in currency that can either be held by the public as currency or deposited into banks. Banks' desired reserve/deposit ratio is 10 percent. If the public of Macroland decides to hold more currency, increasing the proportion they hold from 50 percent to 75 percent, the money supply in Macroland will ________.
A. decrease. B. remain the same. C. either increase or decrease. D. increase.