People derive utility in their lives from consuming goods (all other goods), g, and clean air (measured as the number of particulates removed per m3), a, as measured with the utility function U(g,a) = g0.6a0.4
The price index of consumer goods equals $20 per day. Income equals $1000. What is likely to happen to the number of asthma cases as the price of clean air (abatement cost) increases from $10 to $20? A) Asthma cases decrease because the particulants per m3 increases by 2 units.
B) Asthma cases increase because the particulant per m3 decreases by 2 units.
C) Asthma cases increase because the particulants per m3 increase by 2 units.
D) There is not enough information to answer this question.
C
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Rate of return regulation is equivalent to
A) average cost pricing rule. B) marginal cost pricing rule. C) maximizing consumer surplus. D) maximizing producer surplus.
Income is considered to be a
A) nontaxable stream of funds. B) flow. C) stock. D) resource.
An increase in the price level will: a. make the consumption function flatter. b. make the consumption function steeper
c. increase consumption because wages will increase. d. decrease consumption because falling interest rates make it cheaper to borrow. e. decrease consumption because the value of net wealth will decrease.
When unplanned inventory changes are positive, GDP is current at its equilibrium level
a. True b. False