Economic theory indicates that the amount consumed of a natural resource depends on
a. the price of the resource.
b. consumer income.
c. the price of substitute resources.
d. all of the above.
D
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A monopolist’s cost curves may shift up because of
A. advertising expenditure. B. bureaucratic inefficiencies. C. coordination problems. D. All of these responses are correct.
The Golden Rule is an example of a private solution for
a. subsidizing higher education. b. internalizing externalities. c. increasing production. d. reducing scarcity.
Suppose B(Q) = 5Q ? Q2Â and C(Q) = 1 + Q2. Then, net benefits are ________ when Q equals ________ units since the second-order condition is ________.
A. maximized; 5/4; negative B. maximized; 4/5; positive C. minimized; 4/5; negative D. minimized; ?1; positive
During 2003, the Federal Reserve began to openly discuss deflation. Their comments suggested they
A. knew it was something to watch because of the Japanese experience of the 1990s, but did not alter policy significantly to combat it. B. were neutral about whether deflation would be a good thing. C. were enthusiastic about the possibility. D. knew it would be a disaster, so they immediately cut the target federal funds rate by 5 percentage points to avoid the possibility.