An increase in the value of an asset over the price initially paid for it is a
A. dividend.
B. capital gain.
C. share of stock.
D. promissory note.
Answer: B
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If a price ceiling of $8 were placed in the market in the graph shown:
A. some surplus is transferred from consumer to producer.
B. some surplus is transferred from producer to consumer.
C. all consumers are made better off.
D. all producers are made better off.
AACSB: Knowledge Application
Suppose there are two identical factories on a river. Both require clean water for their production processes. The upstream firm gets clean water from the river and dumps dirty water into the river. The downstream firm must clean the water it gets from
the river before it can use the water and later it dumps dirty water into the river. In this situation A) the private costs of the two firms are the same since both dump dirty water into the river. B) the upstream factory's private costs are lower than its social costs since it passes the costs of the dirty water on to the downstream firm. For the downstream firms, private costs equal social costs. C) the private costs of the downstream firm are greater than the private costs of the upstream firm and the social costs are less than the private costs for both firms. D) the private costs of the upstream firm are less than its social costs while the social costs of the downstream firm are less than its private costs.
Suppose you are very picky about your outdoor BBQ experiences --- and you need exactly 1 cup of lighter fluid for each bag of charcoal you use. If you have either leftover charcoal or leftover lighter fluid, you simply discard it.
a. Letting cups of lighter fluid be denoted as 
and bags of charcoal as 
, give the simplest possible utility function that captures your tastes.
b. Suppose that your favorite charcoal has just gotten better because the producer has infused the charcoal with half a cup of lighter fluid per bag. How does your answer to (a) change?
What will be an ideal response?
Does a subsidy to sellers affect the demand curve?
A. Yes, it shifts demand up by the amount of the subsidy. B. Yes, it shifts demand to the right by the amount of the subsidy. C. No, the quantity demanded will increase, but the demand curve does not move. D. No, the quantity demanded will decrease, but the demand curve does not move.