Which of the following is true? Partial equilibrium analysis will
A) overstate the impact of a tax for both substitutes and complements.
B) understate the impact of a tax for both substitutes and complements.
C) understate the impact of a tax for complements and overstate the impact for substitutes.
D) understate the impact of a tax for substitutes and overstate the impact for complements.
D
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Consider the following three statements:
i. You can either stand during a college football game or you can sit. You believe that you will see the game very well if you stand and others sit but that you will not be able to see at all if you sit and others stand. You therefore decide to stand. ii. Your friend tells you that he expects many people to stand at football games. iii. An economist studies photos of many college football games and estimates that 75 percent of all fans stand and 25 percent sit. Which of these statements deals with optimization, which deals with equilibrium, and which deals with empiricism? Explain.
Unemployment insurance and the progressive income tax are two examples of automatic stabilizers
Indicate whether the statement is true or false
Suppose you observe that minor changes in supply seem to cause dramatic changes in price. You would conclude that
a. demand is unit elastic b. demand is elastic c. demand is inelastic d. demand is perfectly inelastic
The statement "as more of a good is consumed, the utility a person derives from each additional unit diminishes" is known as the:
A. water and diamond paradox. B. law of diminishing marginal utility. C. law of total utility. D. marginal-utility-to-price ratio equalization rule.