When the price of a good changes, the substitution effect can be found by comparing the equilibrium quantities purchased
A) on the old budget line and the new budget line.
B) on the original indifference curve when faced with the original prices and when faced with the new prices.
C) on the new budget line and a hypothetical budget line that is a shift back to the original indifference curve parallel to the new budget line.
D) on the new indifference curve.
B
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An increase in the demand for computers and a decrease in the number of sellers of computers will definitely ________
A) increase the number of computers bought B) increase the price of a computer C) increase the price of a computer and the number of computers bought D) not change the price of a computer and increase the number of computers bought
If your income goes up by 2% and, in response, the quantity demanded of good x falls by 3%, the good x can be considered
a. An inferior good b. A normal good c. A public good d. A private good
If it costs $2,000 to pick up all the litter along a 100-mile stretch of highway, then the cost of the negative externality associated with the litter is
a. $0 b. more than $0, but less than $2,000 c. $2,000 d. more than $2,000 . but finite e. infinite
The concept of marginal utility:
A. is the loss in utility from making a bad decision. B. explains why individuals find it difficult to maximize their total utility. C. is the change in total utility that comes from consuming one additional unit of a good or service. D. can only be applied to situations in which individuals can choose among several goods or services.