The net increase to total surplus when a negative externality is corrected or eliminated is due to:
A. the transfer of surplus from those affected by the externality to the consumer.
B. the reduced number of transactions in the market.
C. the transfer of surplus from consumer or producer to those affected by the externality.
D. None of these statements is true.
B. the reduced number of transactions in the market.
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The figure above shows Clara's demand for CDs. At a price of $5 for a CD, the value of Clara's total consumer surplus for all the CDs she buys is
A) $5. B) $10. C) $25. D) $125.
Which of the following is true of the short-run aggregate supply curve?
a. It shows the relation between the inflation rate and the quantity of aggregate output firms supply, other things constant. b. It shows the relation between the price of labor and the aggregate quantity of labor workers supply, other things constant. c. It shows the relation between the interest rate and the quantity of capital goods firms supply, other things constant. d. It shows the relation between the price level and the quantity of aggregate output firms supply, other things constant. e. It shows an inverse relationship between the price level and real GDP.