The aggregate supply-aggregate demand diagram models
A. the behavior of individual firms.
B. the interaction of producers and consumers for a particular good or service.
C. the economy as a whole.
D. the behavior of individual consumers.
Answer: C
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Suppose pollution, which generates a negative externality, exists in a market. If transactions costs are low and parties are willing to bargain, then, according to the Coase theorem,
A) an equitable solution can only be reached if property rights are assigned to the victims of pollution and not the polluters. B) an equitable solution can only be reached if property rights are assigned to the polluters, and not the victims of pollution. C) an efficient solution can be reached regardless of the initial assignment of property rights. D) government intervention is necessary to reach an efficient and equitable solution.
The figure above provides information for a factory that produces chemicals that pollute a waterway. The waterway is used by water skiers. The efficient quantity of chemicals to produce is ________ tons of chemicals a week
A) 1 ton B) as many tons as possible C) 3 tons D) 5 tons
Perfect competition is an ideal market structure.
Answer the following statement true (T) or false (F)
Keynesian economics focuses on:
A. both the long run and the short run. B. the long run. C. the short run. D. neither the long run nor the short run.