At the best affordable point, consumers equate their marginal rates of substitution to
A) their money income.
B) their real income.
C) relative prices.
D) relative quantities.
C
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Specialization allows a society to produce ________ goods.
A. more B. the same amount of C. fewer D. new
If the Consumer Price Index was 125 in one year and 120 in the following year, then the rate of inflation is approximately
A. 4%. B. -4%. C. -4.2%. D. 4.2%.
College education is an example of a positive externality.
A. True B. False C. Uncertain
Figure 4-12
Refer to . The supply curve S and the demand curve D1 indicate initial conditions in the market for college textbooks. A new government program is implemented that grants students a $30 per textbook subsidy on every textbook they purchase, shifting the demand curve from D1 to D2. Which of the following is true for this subsidy given the information provided in the exhibit?
a.
The original average selling price of textbooks was $100, and after the subsidy it rises to $120.
b.
$90 represents the net price a buyer must pay for a textbook after taking into account the subsidy payment.
c.
Textbook buyers will receive an actual benefit of $10 from the subsidy, while textbook sellers will receive an actual benefit of $20 from the subsidy.
d.
All of the above are true.