Which of the following is true about the indifference curve where one commodity (such as pollution) is "bad"?
A) It has a negative slope.
B) It has a positive slope.
C) It is horizontal.
D) It is vertical.
B
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The equation of exchange
A) is MV = PY. B) becomes the quantity theory if velocity and the price level are constant. C) cannot be used in an economy with inflation. D) All of the above answers are correct.
National defense is provided by the government because
a. it is impossible for private markets to produce public goods. b. products provided by the government are produced more efficiently. c. free-riders make it difficult for private markets to supply the socially optimal quantity. d. public goods increase government revenues.
Figure 9.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 80% of used cars in the market are lemons (low quality), how many plums will be supplied in the market?
A. 30 B. 40 C. 70 D. 120
Adjustment costs are the costs that a firm incurs when it
A. depreciates assets. B. issues stock. C. issues bonds. D. changes its production level.