Which of the following is not a determinant of demand?
a. the price of a resource that is used to produce the good
b. the price of a complementary good
c. the price of the good next month
d. the price of a substitute good
a
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Why do negative externalities like pollution result in inefficiency?
a. Because producers artificially restrict their supply. b. Because producers ignore the external costs they impose on third-parties. c. Because producers manufacture more goods than people can afford to buy. d. Because producers will receive an unequal distribution of profits.
Why are people willing to pay more for a diamond than for a bottle of water?
What will be an ideal response?
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
According to the optimal output rule, if marginal benefit:
a. exceeds marginal cost, an activity should be reduced. b. is less than marginal cost, an activity should be increased. c. is equal to marginal cost, net benefit is maximized. d. exceeds marginal cost, net benefit is maximized.