If a good is produced by firms that incur all private and external costs, the price consumers pay
A) will be efficient since it includes all social costs.
B) will not be socially acceptable.
C) will be too high because the consumers end up paying all of the costs instead of the firm.
D) will be the correct price, but inefficient.
Answer: A
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On the modern Phillips curve, the initial impact of an increase in the world price of steel is shown by ________
A) an upward movement along the Phillips curve to a higher inflation rate B) an upward shift of the Phillips curve leading to higher inflation rates for any unemployment rate C) a downward shift of the Phillips curve leading to lower inflation rates for any unemployment rate D) a downward movement along the Phillips curve to higher unemployment rates E) none of the above
Which of the following comparisons is true regarding price elasticity of demand?
A. The demand for monthly car payments is less elastic than the demand for a monthly gym membership because the car payments require a greater share of the consumer's income. B. The demand for gasoline a year after a price change is less elastic than the demand for gasoline a week after a price change because consumers have had time to adjust. C. The demand for water is less elastic than the demand for diamonds because water is a necessity but diamonds are a luxury. D. The demand for cough syrup is less elastic than the demand for insulin because there are no close substitutes for insulin.