Technology is a primary source of economies of scale for many firms.
Answer the following statement true (T) or false (F)
True
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The income effect of a price change results in a
A) shift of the demand curve when income changes. B) movement along the demand curve due to a change in relative prices. C) shift of the demand curve due to a change in purchasing power brought about by the price change. D) movement along the demand curve due to a change in purchasing power brought about by the price change.
According to the Laffer curve, an increase in the tax rate may decrease tax revenues.
Answer the following statement true (T) or false (F)
Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:
A. excess supply will lead the price to fall. B. excess demand will lead the price to fall. C. excess supply will lead the price to rise. D. excess demand will lead the price to rise.
Use the following information to answer the question below. It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment. If the government intervenes and corrects the externality in the situation described above, we would expect
A. production in the paper mills to decrease. B. production of the hydroelectric power plants to decrease. C. the price of paper from the mills to decrease. D. the output of the paper mills to increase.