If an increase in income results in higher prices for yachts, we can conclude
A. that yachts are inferior goods.
B. that there was a decrease in the supply of yachts.
C. that there was an increase in the supply of yachts.
D. that yachts are normal goods.
E. there’s no relationship between income and the demand for yachts.
Answer: D
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Because a public good creates benefits everyone shares, individuals are generally very willing to bear the cost of providing the good
Indicate whether the statement is true or false
When demand is unit elastic, a 10 percent change in the price of the good
A) will cause a change in quantity demanded of less than 10 percent. B) will cause a change in quantity demanded equal to 10 percent. C) will cause a change in quantity demanded greater than 10 percent. D) will not cause any change in quantity demanded.
Supply tends to be more elastic in the short run and more inelastic in the long run
a. True b. False Indicate whether the statement is true or false
Suppose the government imposes a tax in a certain market in order to internalize an externality. This type of policy is based on which of the Ten Principles of Economics?
a. People face trade-offs. b. People respond to incentives. c. Markets are usually a good way to organize economic activity. d. The cost of something is what you give up to get it.