The difference between the value of a good to consumers and its price is known as:
a. demand
b. marginal utility.
c. total utility.
d. consumer surplus.
d
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The number of people who have gray hair is very high among residents living in Florida. A student concludes that living in Florida causes hair to turn gray. What is the flaw in this student's reasoning?
A) The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents. B) The student has failed to take into account other causes of gray hair. C) The student is using an inadequate sample size. D) The student is drawing a false conclusion; he is confusing cause and effect.
Private solutions to the problem of externalities are most likely when
A) transactions costs are low and the number of bargaining parties is small. B) transactions costs are low and the monetary damages to third parties are high. C) government actively encourages these solutions. D) transactions costs are low and the number of bargaining parties is large.
Government decisions about the level of taxation and public spending are called:
A. fiscal policy. B. monetary policy. C. congressional policy. D. legislative budgeting policy.
If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is
a. zero, and the supply curve is horizontal. b. zero, and the supply curve is vertical. c. infinity, and the supply curve is horizontal. d. infinity, and the supply curve is vertical.