Two products are perfect complements if:
A. a consumer is willing to swap one for another at a fixed rate.
B. they are valuable only when used together in fixed proportions.
C. their indifference curves are straight lines.
D. they lie on the same indifference curve.
B. they are valuable only when used together in fixed proportions.
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Most economists believe that there are positive externalities in education. One can conclude that a free market would fail to give the socially optimal outcome because in comparison to the socially optimal (efficient) equilibrium, the inefficient equilibrium
A. price and quantity would be too high. B. price would be too low and quantity would be too high. C. price and quantity would be too low. D. price would be too high and quantity would be too low.
According to the Classical economists, the economy
A. requires fine-tuning to reach full employment. B. will never be at full employment. C. has sticky prices in many industries. D. is self-correcting.
Refer to Table 9-9. Suppose that the data in the table above reflect the price levels in the economy. Given that data, we can say that the cost of living rose by ________ between 2015 and 2016?
A) 2% B) 5% C) 8% D) 11% E) 13%
Starting from long-run equilibrium, a sharp drop in oil prices results in ________ output in the short run and ________ output in the long run.
A. lower; higher B. higher; higher C. higher; potential D. lower; potential