At prices above a consumer's reservation price:
A. the opportunity cost is less than the benefit from having the good.
B. the buyer will purchase the good.
C. the opportunity cost is greater than the benefit from having the good.
D. the willingness to pay is greater than the price.
Answer: C
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The first step toward reducing negative externalities or maintaining them within acceptable bounds, according to the argument of the textbook, is
A) constructing an exhaustive list of all negative externalities. B) creating a central planning authority for negative externalities. C) cultivating such civic virtues as courtesy and tolerance. D) halting population growth. E) prohibiting activities whose costs are greater than their benefits.
When the price of a soft drink from the campus vending machine was? $0.60 per? can, 100 cans were sold each day. After the price increased to? $0.75 per? can, sales dropped to 85 cans per day. Over this? range, the absolute price elasticity of demand for soft drinks was approximately equal to
A) 0.15.
B) 0.60.
C) 0.73.
D) 1.67.
When the investment is graphed as a function of real GDP
A. it graphs as a vertical straight line. B. it graphs as a negatively sloped line indicating the inverse relationship between interest rates and investment. C. it graphs as a horizontal straight line at the level of investment. D. it graphs as a 45-degree line starting at the indicated level of investment.
If the short-run aggregate supply increases by less than the long-run aggregate supply, then, at the short-run equilibrium
A) GDP will be below potential GDP. B) aggregate demand will increase. C) GDP will be equal to potential GDP. D) GDP will be above potential GDP.