James enjoys gardening in the nude because he says it puts him in touch with nature. His neighbors find his gardening routine very offensive, but James replies that they should mind their own business and not watch him. To an economist this situation illustrates the concept of:
A. a positive externality.
B. adverse selection.
C. a negative externality.
D. the tragedy of the commons.
Answer: C
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The aggregate demand curve:
a. shows the amount of real output that will be purchased at each possible price level. b. is downsloping because production costs decline as real output increases. c. shows the amount of expenditures required to induce the production of each possible level of real output. d. is upsloping because a higher price level is necessary to make production profitable as production costs rise.
Table 7.1GDP?Nominal GDP(in billions of dollars)GDP deflatorCPI2002S6,992.4106.2151.620037,431.6109.1153.820047,843.2112.3157.8Based on Table 7.1, the real GDP for 2004 was
A. $6,811.7 billion. B. $6,584.2 billion. C. $4,970.3 billion. D. $6,984.1 billion.
Other things equal, a decrease in the price level will:
A. shift the aggregate supply curve to the left. B. shift the aggregate demand curve to the left. C. cause a movement up a short-run aggregate supply curve. D. cause a movement down an aggregate supply curve.
If the long-run supply curve in a perfectly competitive industry is upward sloping, this is because
A) firms are different. B) firms are identical. C) input prices rise as the industry expands. D) Either A or C.