A downward-sloping demand curve can be derived for a normal product by increasing its price in the consumer-behavior model and noting
A) the increase in the utility-maximizing quantity of that product demanded.
B) the decrease in the utility-maximizing quantity of that product demanded.
C) a substitution effect that encourages more consumption of that product.
D) an income effect that encourages more consumption of that product.
Ans: B) the decrease in the utility-maximizing quantity of that product demanded.
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In the above figure, suppose the economy is initially at point A. People come to expect the future U.S. exchange rate to be higher. As a result there is a change from point A to a point such as ________
A) point B B) point C C) point D D) point E
Which of the following correctly describes the external benefit resulting from an individual's purchase of a winter flu shot?
a. The flu shot is cheaper than the cost of treatment when you get the flu. b. The income of doctors increases when you get the flu shot. c. The flu shot reduces the likelihood others will catch the flu. d. The flu shot reduces the likelihood you will miss work as the result of sickness; therefore, you will earn more income.
Private markets fail to reach a socially optimal equilibrium when negative externalities are present because
a. social costs equal private costs at the private market solution. b. private costs exceed social costs at the private market solution. c. social costs exceed private costs at the private market solution. d. they internalize externalities.
Capital is _______________
A. the crucial element in every economic system. B. the key to every society's standard of living. C. the result from savings. D. All of these statements describe capital.