If there are no externalities, a competitive market achieves economic efficiency. If there is a negative externality, economic efficiency will not be achieved because
A) a deadweight loss will occur that is equal to the area under the demand curve for the good.
B) too much of the good will be produced.
C) too little of the good will be produced.
D) economic surplus is maximized.
B
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If demand is inelastic, an increase in the price will
A) decrease total revenue. B) increase total revenue. C) not change total revenue. D) increase the quantity demanded.
The "new product bias" in the consumer price index refers to the idea that
A) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers. B) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers. C) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers. D) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers.
An estimated demand curve does NOT necessarily match actual data perfectly because
A) it is not possible to accurately calculate the coefficients of the curve. B) some factors that are not measured or observed may affect the curve. C) the random error term has too large of a range. D) demand is unpredictable.
Which of the following properties should a commodity have to be considered as money?
a. It should be scarce and rare. b. It should be perishable. c. It should be indivisible. d. It should be unpredictable in value. e. It should be homogenous in nature.