Assuming bottled water and cola are substitutes, if the price of bottled water rises
A. the demand curve for cola will shift to the right.
B. there is a movement along the demand curve for cola.
C. the demand curve for bottled water will shift to the right.
D. the demand curve for bottled water will shift to the left.
Answer: A
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If firms must pay full liability for accidents plus punitive damages, then
a. the private costs of firms' activities will be equal to the social costs. b. firms will have an incentive to make efficient choices. c. social welfare will be higher than if no punitive damages were assessed. d. firms will undertake less activity than would be socially optimal.
To pay for a current account deficit, a country can
A) borrow money from abroad. B) lend money abroad. C) increase official reserves to cover the shortfall. D) transfer money from the capital account to the official settlements account.
According to Say's Law,
a. demand creates its own supply b. interest rates never change c. there is never too much or too little spending d. prices never change e. the market for loanable funds is always in equilibrium
When the supply of land is upward sloping,
a. all land owners earn land rents b. the demand for land must intersect it c. all land owners have the same supply price d. different supply prices are generated for different lands e. a rightward shift in demand causes land rents to fall