When PAE < Y the economic response should be:
A. eventually production will decrease.
B. eventually production will increase.
C. there will be no change in aggregate production.
D. the government will intervene by cutting down on taxes.
A. eventually production will decrease.
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The quantity equation is M x V = P x Y
a. True b. False Indicate whether the statement is true or false
Consider the case of two farmers, Tony and Hakim, depicted in the following figure. Both use DDT (a chemical pesticide) for their crops. The use of DDT causes an externality for swimmers down river from the farms.
(a) Show the amount of pesticides used if each uses the privately optimal level of pesticides.
(b) Show the amount of pesticides used if they are socially concerned.
(c) Why is a reduction back to X H = H T not socially desired?
How much will output be in the short run if price is (a) $120? (b) $135? (c) $150? (d) $175?
All other factors held constant, when McDonald's raises the price of its Big Mac by 20 cents,
A. there is likely to be an increase in demand for Taco Bell's Chalupas, assuming the Big Mac and Chalupas are substitutes. B. there is likely to be an increase in demand for McDonald's Big Mac, assuming the Big Mac and Chalupas are substitutes. C. there is likely to be a decrease in demand for Taco Bell's Chalupas, assuming the Big Mac and Chalupas are substitutes. D. there is likely to be a decrease in the quantity of Taco Bell's Chalupas demanded, assuming the Big Mac and Chalupas are substitutes.