Refer to Figure 5-5. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does D1 represent?
A) the demand curve reflecting social benefits
B) the demand curve reflecting the sum of private and social benefits
C) the demand curve reflecting private benefits
D) the demand curve reflecting external benefits
C
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Suppose you purchase a new home for $250,000, making a down payment of 25% and taking out a mortgage on the balance. What is the return on your investment in your home if one year later the price of your home increases by 30%?
A) 27.5% B) 41.7% C) 83.3% D) 120%
The above figure shows Bobby's indifference map for juice and snacks. Also shown are three budget lines resulting from different prices for snacks. As the price of snacks rises, Bobby's utility
A) stays the same. B) increases. C) decreases. D) might change, but there is not enough information to determine.
Activities designed to convert resources into goods and services is known as
A) supply. B) consumption. C) production. D) scarcity.
Which one of the following would cause an increase in the demand for hotel rooms in Hawaii?
A) an increase in airfares to Hawaii B) a decrease in airfares to Hawaii C) an upward movement along the demand curve for stays in Hawaiian hotel rooms D) a downward movement along the demand curve for stays in Hawaiian hotel rooms