The movement of the budget line from BB to bb in the above figure suggests that income has:
A) increased and the price of X has decreased.
B) fallen and the price of Y has increased.
C) fallen and the price of X has decreased.
D) decreased but there have been no price changes.
Answer: B) fallen and the price of Y has increased.
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If a particular perfectly competitive industry uses only a small fraction of the supply of any of its inputs, the long run supply curve for that industry will tend to be: a. vertical
b. upward sloping. c. horizontal. d. downward sloping.
In the case of a negative externality, in order to achieve efficiency the government must set the _________________ equal to the marginal ____________________
A) tax; external costs B) tax; external benefits C) subsidy; external costs D) subsidy; external benefits E) tax; private costs
The law of supply is illustrated by a supply curve that is:
a. Vertical b. Downward sloping c. Upward sloping d. Horizontal
To help reduce the price level, the government could:
A. run budget deficits. B. decrease taxes. C. increase government spending. D. run budget surpluses.