Along a segment of the demand curve where the price elasticity of demand is less than 1, a decrease in price:
a. decreases quantity demanded.
b. will increase total revenue.
c. will decrease total revenue.
d. is impossible.
c
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The commodity substitution bias is that consumers substitute high-quality goods for low-quality goods
Indicate whether the statement is true or false
An increase in business tax rates, combined with a decrease in consumer confidence, would have what effect on aggregate demand? a. AD would increase
b. AD would decrease. c. AD would stay the same. d. AD could either increase or decrease, depending on which change was of a greater magnitude.
Which combination of fiscal policy actions would most likely be offsetting?
A. Increase in taxes and government spending B. Increase in taxes but no change in government spending C. Decrease in taxes and increase in government spending D. Decrease in taxes but no change in government spending
Which of the following is a TRUE statement?
A) Any property right system will yield a situation in which all externalities are internalized. B) Voluntary agreements can always yield a situation in which all externalities are internalized. C) Opportunity costs always exist with whoever has property rights. D) Opportunity costs turn external costs into social costs.