When supply decreases and the supply curve shifts to the left, equilibrium price ________ and equilibrium quantity ________.
A. increases; increases
B. increases; decreases
C. decreases; increases
D. decreases; decreases
Answer: B
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Why is it difficult for the market to deliver socially efficient quantities of goods like clean air or street lighting?
What will be an ideal response?
Suppose Bev's Bags makes two kinds of handbags-large and small. Bev rents an industrial space where she keeps the fabric, the industrial sewing machine, her measuring board and cutting shears, extra needles, thread and buttons, and labels. If Bev were to produce no bags, which of the following is true regarding Bev's costs?
A. The variable cost of fabric would drop to zero. B. The fixed cost of thread would stay the same. C. The variable cost of cutting shears would drop to zero. D. All of these are true.
If one country can produce a good with fewer resources than another country, this is called:
a. absolute advantage. b. geographic advantage. c. specialization. d. comparative advantage.
Which of the following illustrates the principle of second best?
A. The government decides to impose taxes on all automobiles rather than imposing a tax only on luxury automobiles. B. The government imposes a tax on a meat processing plant that equals the cost of cleaning the lake damaged by the waste discharged into the lake by the meat processor. C. A tax imposed on land, because this tax distorts economic decisions less than taxes on other factors of production. D. The government imposes taxes on cigarettes and the tax revenue collected is used to pay for health care.