What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?
A) Prescription medications will become an inferior good.
B) There is an upward movement along the demand curve for prescription medications.
C) There is a downward movement along the demand curve for prescription medications.
D) The demand for prescription medications will decrease.
Answer: D
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A competitive equilibrium is Pareto-efficient because at the competitive equilibrium,
A) prices have been allowed to adjust. B) there are no further gains from trade. C) the final outcome is different from the original inefficient endowment. D) all members of society can be made better off.
Using baseline budgeting,
A. an increase in spending is spending greater than that needed to provide an unchanged level of services. B. an increase in spending is spending greater than last year's spending. C. an increase in spending is spending greater than that needed to keep up with inflation. D. all budgets revert to zero at the beginning of each fiscal year.
The more progressive the tax system, the:
A. less is the effect of crowding out on the economy. B. greater is the severity of business fluctuations on the economy. C. less is the built-in stability for the economy. D. greater is the built-in stability for the economy.
If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n)
A. increase in the quantity of ice cream supplied and a movement down along the supply curve. B. increase in the supply of ice cream and a rightward shift of the supply curve. C. decrease in the quantity of ice cream supplied and a movement up along the supply curve. D. decrease in the supply of ice cream and a leftward shift of the supply curve.