Figure 7-6
Between $3 and $4, the price elasticity of the demand curve depicted in is
a.
relatively inelastic.
b.
approximately equal to -0.33.
c.
approximately equal to -3.
d.
both a and b.
d
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Assume the money market is initially in equilibrium. If the price level decreases, then according to liquidity preference theory there is an excess
a. supply of money until the interest rate increases. b. supply of money until the interest rate decreases. c. demand for money until the interest rate increases. d. demand for money until the interest rate decreases.
The accompanying figure shows Avery's weekly production possibilities curve for scarves. 
Avery's PPC would shift outward if she:
A. devotes less time to knitting each week. B. knits fewer red scarves and more blue scarves each week. C. devotes more time to knitting each week. D. knits more red scarves and fewer blue scarves each week.
About how much of the tax is paid by consumers in the form of higher prices?
A. $1.00
B. $1.35
C. $1.65
D. $2.00
A negative externality occurs when: a. the social cost curve lies above the private cost curve
b. the social cost curve is below the private cost curve. c. a third party benefits from a market transaction by others. d. there is an increase in the private cost borne by sellers.