Refer to the information provided in Figure 6.5 below to answer the question(s) that follow.
Figure 6.5Refer to Figure 6.5. Molly's budget constraint is BD. If the price of CDs increases, her new budget constraint becomes
A. CD.
B. AD.
C. BD.
D. EF.
Answer: B
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Refer to Figure 13-4. Should the firm represented in the diagram continue to stay in business despite its losses?
A) No, it is not able to cover its fixed cost. B) Yes, it should increase its revenue by raising its price. C) Yes, its total revenue covers its variable cost. D) No, it should shut down.
The leakage and injections approach implies that deficit spending by the government must be financed by
A) private investment less private savings plus net exports. B) private saving less private investment plus net exports. C) the trade deficit must always offset the government deficit. D) B and C.
Suppose the inverse market demand is given by P = 20 ? Q. If the incumbent continues to produce eight units of output, which of the following equations best summarizes the potential entrant's residual demand curve?
A. P = 8 ? Q B. P = 12 ? Q C. P = 12 ? 8Q D. P = 20 ? 12Q
When parents inoculate their children from communicable diseases prior to sending them off to school they not only provide their own children a benefit but also bestow a benefit on every other student at the school
There are now fewer students who can pass on these types of diseases. However, parents are not likely to take into account the fact that their actions create this external benefit. Therefore, economists argue that the market on its own may not provide for the optimal level of inoculations. What methods might work to get parents to take into account the external benefit when deciding whether to inoculate their children?