Negative externalities arising from the production of a good
A. cause an increase in the demand for the good.
B. cause a decrease in the demand for the good.
C. impose costs on third parties.
D. bring private costs into equality with social costs.
Answer: C
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There is an increase in the demand for cream when the price of coffee falls. Other things constant, we can conclude that coffee and cream are
A) substitute goods. B) inferior goods. C) independent goods. D) complementary goods.
Refer to the above figure. We are currently producing at point c. Which of the following statements is TRUE?
A) Resources are not being efficiently utilized. B) Resources are being efficiently utilized. C) The only way to produce more of Goods X or Y is to have an increase in the amount of resources. D) The Law of Increasing Additional Cost does not hold.
Suppose a farmer is a price taker for soybean sales with cost functions given by TC = .1q2 + 2q + 30 MC = .2q + 2 The profit maximizing level of output is
a. 0 b. 30 c. 40 d. 50
The purchasing power of the dollar
A. varies inversely with the price level. B. varies directly with interest rates. C. varies directly with the price of gold. D. varies directly with the price level.