External costs are those costs:
A. that are both social costs and private costs.
B. that fall directly on an economic decision maker.
C. that fall indirectly on an economic decision maker.
D. that are imposed without compensation on someone other than the person who caused them.
Answer: D
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The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
A key assumption made when a supply schedule is constructed is that
A. the only factors that matter in determining supply are price and quantity. B. firms only want to sell a certain amount of a product. C. supply is too important to be left to the marketplace. D. only price and quantity vary, all other determinants of supply are held constant. E. demand has a positive slope.
The above figure shows a perfectly competitive firm. If the market price is $15 per unit, the firm
A) will definitely shut down to minimize its losses. B) will stay open to produce and will make zero economic profit. C) will stay open to produce and will incur an economic loss. D) will stay open to produce and will make an economic profit. E) might shut down but more information is needed about the fixed cost.
Each of these is a category of C except
A. durables. B. nondurables. C. residential construction. D. services.