Refer to the figure above. The MSB curve lies to the right of the demand curve because the production of Good Y involves ________
A) positive externalities
B) negative externalities
C) increasing returns to scale
D) decreasing returns to scale
A
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"An increase in Mexican income decreases aggregate demand in the United States." Is the preceding statement correct or incorrect? Briefly explain your answer
What will be an ideal response?
Medical research that results in a cure for a serious disease produces positive externalities. What is the impact of this positive externality on economic efficiency?
A) At equilibrium, less than the economically efficient quantity of medical research is produced. B) At equilibrium, more than the economically efficient quantity of medical research is produced. C) A deadweight loss occurs because at equilibrium the marginal social cost of medical research is greater than the marginal social benefit. D) A deadweight loss occurs because at equilibrium the marginal social cost equals the marginal social benefit.
A local video store estimates its average customer's demand per year is Q = 7 ? 2P, and it knows the marginal cost of each rental is $0.5. How much should the store charge for an annual membership in order to extract the entire consumer surplus via an optimal two-part pricing strategy?
A. $9 B. $10 C. $12 D. $11
When the price of cheddar cheese increases 15%, quantity demanded decreases 15%. The price elasticity of demand for cheddar cheese is ________ and total revenue from cheddar cheese sales will ________.
A. unit elastic; not change B. inelastic; decrease C. elastic; increase D. elastic; decrease