Satellite TV is a close substitute for cable TV. In the 1990s, small satellite TV units were developed that made it less costly for individual consumers to subscribe to satellite TV service. This caused the price elasticity of demand for cable TV service to:
A. shift to the left.
B. become more inelastic.
C. become more elastic.
D. become less elastic.
Answer: C
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If this pollution occurs, one way of reaching efficient production levels is by setting a Pigovian Tax. To achieve efficiency with this tax means that the tax must equal the
A) marginal social cost. B) marginal private cost. C) marginal private benefit. D) marginal external cost.
When demand for a product increases but the supply of the product remains unchanged, the equilibrium price of the product will
a. rise and equilibrium quantity will decrease. b. fall. c. first fall and then return to the original level. d. rise, and equilibrium quantity will increase.
If the economy were at its potential output level, which of the following is not true?
a. The actual unemployment rate would equal the natural rate. b. There would be some cyclical unemployment. c. There would be some frictional unemployment. d. There would be some structural unemployment.
If the relative price of one product rises and labor is mobile, then:
a. the percentage increase in the equilibrium real wage will be exactly the same as the percentage increase in the relative price. b. the percentage increase in the equilibrium real wage will be lower than the percentage increase in the relative price. c. the percentage increase in the equilibrium real wage will be higher than the percentage increase in the relative price. d. the equilibrium real wage will not change.