The price of a good will fall if:
A. there is an excess demand of the good.
B. demand and supply of the good are the same.
C. there is an excess supply of the good.
D. the price is below the equilibrium price.
Answer: C
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A country reports that its actual real GDP is greater than its potential GDP. It must be that
A) more workers decided to quit work in order to enjoy leisure time. B) the excess by which real GDP exceeds potential GDP is only temporary, and eventually real GDP will decrease to be equal to potential GDP. C) the price level is increasing. D) an error was made when calculating actual real GDP. E) None of the above answers is correct because it is impossible for a country's real GDP to exceed its potential GDP.
Economists generally favor the use of tradable emission allowances to reduce pollution. However, the use of these allowances has been criticized by some environmentalists. Which of the following describes this criticism?
A) Some environmentalists believe that Pigovian taxes are a more efficient way to reduce pollution. B) Some environmentalists oppose allowances on legal grounds; they believe the use of allowances is unconstitutional. C) Some environmentalists believe that the price of allowances is often too high for consumers to afford. D) Some environmentalists believe the allowances give firms a license to pollute.
The present discounted value of a future payment will decrease when interest rates decrease.
Answer the following statement true (T) or false (F)
There are 10 families in a neighborhood that are affected by noise pollution from a local factory. The noise could be reduced if the company spent $5,000 on technological improvements. The company agrees to make these improvements if the affected families contribute the $5,000. Since there are no legal restrictions governing the factory's noise, the negotiations fail. This outcome is an example of the
A. Coase theorem. B. drop-in-the-bucket problem. C. free-rider problem. D. problem that arises when property rights are not defined.