Related to the Economics in Practice on p. 51: The Amazon Kindle and the electronic textbooks available for the Kindle are complementary goods. Electronic textbooks and traditional, hard-copy textbooks are substitute products. If the price of electronic textbooks for the Kindle increases
A. demand for the Kindle decreases, demand for electronic textbooks decreases, and demand for traditional, hard-copy textbooks increases.
B. demand for the Kindle increases, the quantity of electronic textbooks demanded decreases, and demand for traditional, hard-copy textbooks increases.
C. the quantity of Kindles demanded decreases, demand for electronic textbooks decreases, and the quantity of traditional, hard-copy textbooks demanded increases.
D. demand for the Kindle decreases, the quantity of electronic textbooks demanded decreases, and demand for traditional, hard-copy textbooks increases.
Answer: D
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A) network externality B) pecuniary externality C) adverse selection D) moral hazard
If a marginal cost pricing rule is imposed on the natural monopoly shown in the figure above, then the deadweight loss will equal
A) $0. B) $4 million. C) $8 million. D) $12 million.
A mutual fund that charges a sales commission is a
A) load fund. B) no-load fund. C) closed-end fund. D) premium fund.
Internal cycles are generated by the interaction of changes in investment and changes in national income
Indicate whether the statement is true or false