Electric companies generally practice price discrimination and charge higher prices for electricity used for illumination and lower prices for electricity used for heat. These lower prices for electric heating result primarily from:
A. The existence of good heating substitutes
B. Economies of scale in electric heat generation
C. Prices for electric heat being set at the socially optimal level
D. Strict government regulation of the price charged for electric heat
A. The existence of good heating substitutes
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A person has a comparative advantage in producing a good if that person:
a. can produce the good at a lower absolute cost than anyone else. b. can produce the good at a lower opportunity cost than anyone else. c. can do a better job than anyone else. d. spends more money in out-of-pocket expenses than anyone else. e. can produce the good at a higher opportunity cost than anyone else.
Rational expectations economists believe that the potential effects of government policy changes are ______ addressed by households and firms.
a. slowly b. quickly c. unreasonably d. infrequently
The demand for money refers to the desire to
A. a high income. B. hold money because money is used in all non-barter transactions. C. spend money because money is used in all transactions. D. hold a good that yields utility when it is consumed.
Assume a society can produce either beer or wine. If the marginal rate of transformation of gallons of beer into gallons of wine is 0.5, then the opportunity cost of wine is
A. the 2 gallons of wine that must be forgone. B. the additional 0.5 gallons of beer that can be produced. C. the 0.5 gallons of beer that must be forgone. D. the 2 gallons of beer that must be forgone.