From the perspective of classical macroeconomic theory, if aggregate spending was temporarily less than output:
A. Product price would increase, but resource prices would decrease
B. Product price would decrease, but resource prices would increase
C. Product and resource prices would decrease, so that aggregate spending would rise, expanding output
D. Product and resource prices would increase, so that aggregate spending would equal
output
C. Product and resource prices would decrease, so that aggregate spending would rise, expanding output
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Refer to Pollutants. Suppose transactions costs preclude the possibility of private bargaining between the chemical plant and the farm. Which liability rule will not result in an efficient outcome?
A chemical plant's production adds pollutants to a stream which irrigates a farm's crops. The pollutants damage the farm's crops, increasing the firm's costs by $800 per month. The crop damage may be eliminated in two ways: the chemical plant can install a new filtering system costing $300 per month, or the farm can install a new irrigation system costing $600 per month. a. The chemical plant bears all liability for the crop damage. b. The farm bears all of the costs of the crop damage. c. The chemical plant bears 50% of the liability, while the farm bears the other 50% of the crop damages. d. The Coase Theorem guarantees that any assignment of liability will result in an efficient outcome.
The word oligopoly means
A) elastic demand. B) few sellers. C) independent action. D) interdependent selling. E) predatory pricing.
If students' expenditures on airline travel increase as a consequence of more heavily discounted fares, students' demand for airline travel must be
A) income elastic. B) income inelastic. C) price elastic. D) price inelastic.
How much would be added to this year's GDP if you sold your four-year-old automobile for $4,000 and purchased a two-year-old model from an acquaintance for $10,000
a. nothing b. $6,000 c. $10,000 d. $14,000