The socially optimal price and output combination in Figure 27.1 is
A. P0, Q1.
B. P3, Q3.
C. P1, Q1.
D. P4, Q4.
Answer: D
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Explain how governments restrict international trade and who benefits as well as who loses from the restrictions
What will be an ideal response?
A newly industrialized country is a. the same as a high-income country. b. any country that has experienced sustained growth in industry. c. a special classification given to some upper-middle income countries that have achieved relatively advanced manufacturing sectors
d. any country that has moved out of lower income status.
Suppose that at the beginning of a loan contract, the real interest rate is 4% and expected inflation is currently 6%. If actual inflation turns out to be 7% over the loan contract period, then
A) borrowers gain 1% of the loan value. B) lenders gain 1% of the loan value. C) borrowers lose 3% of the loan value. D) lenders gain 3% of the loan value.
When two variables in a graph are related to a third, changing the third causes
A) a movement along the curve. B) a shift of the curve. C) no change in the curve because the third variable isn't on the axes. D) either a shift or a movement in the curve, but more information is needed to determine which occurs. E) None of the above answers is correct.