Assume that the Clean Air Act requires an increase in sulfur dioxide (SO2) abatement (A) from 50 to 60 percent and that the relevant MSC (in millions) is MSC = 12 + 0.8A, where A is measured in percent. Then, the incremental cost of this policy change is
a. $20 million b. $60 million c. $560 million d. none of the above
c. $560 million
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Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the demand for ice cream
A) increases by 5 percent. B) increases by 20 percent. C) decreases by 5 percent. D) decreases by 20 percent.
Advertising costs of a monopolistically competitive firm are ________
A) greater than a monopoly and the same as a perfectly competitive firm B) greater than a perfectly competitive firm C) less than a perfectly competitive firm D) the same as a monopoly
An unexpected fall in Housing Starts should send bond prices __________ and stock prices __________
A) up; up B) up; down C) down; up D) down; down
Which of the following does NOT contribute to the choice of a policy of hyperinflation?
A) war B) increased price of energy paid to foreigners C) price of export commodities increase D) diminished ability to collect taxes