Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?
a. an accumulation of dirt in the interior of rental cars
b. poor engine maintenance in rental cars
c. free gasoline given to people as an incentive to a rent a car
d. slow replacement of old rental cars with newer ones
c
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Which of the following activities creates a negative externality?
A) cleaning up a public garden in your neighborhood B) graduating from college C) keeping an old refrigerator on your front porch D) using a pooper-scooper every time you walk your dog
If we observe an economy adjusting to potential GDP as prices fall and real output increases, we can conclude that _____
a. the economy was experiencing an expansionary gap b. there is a labor surplus c. the economy was experiencing a recessionary gap d. self-correction is not the process that is occurring e. there are widespread labor shortages
The "invisible hand" refers to the notion that
A) competitive markets send resources to their highest valued uses. B) government intervention is necessary to ensure efficiency. C) marginal benefit decreases as more is consumed. D) marginal cost increases as more is produced. E) no matter what allocation method is used, the resulting production is efficient.
A 10 percent increase in the price of neckties leads to a 5 percent decrease in the quantity demanded of neckties. The absolute price elasticity of demand is
A) 3. B) 0.33. C) 0.5. D) 2.