The typical movement of the aggregate supply curve resulting from an increase in productivity is that it
a. shifts inward and becomes flatter.
b. shifts inward.
c. shifts outward.
d. becomes flatter.
e. becomes steeper.
c
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You have been asked by your economics professor to graph the market for lumber and then to analyze the change that would occur in equilibrium price as a result of recent forest fires in the west. Your first step would be to
a. decide which direction to shift the curve. b. decide whether the fires affected demand or supply. c. graph the shift to see the effect on equilibrium. d. None of the above is correct.
The Coase theorem states that
a. under certain circumstances government intervention is not needed to reach efficient outcomes when an externality is present. b. government intervention is always required to reach an efficient outcome when an externality is present. c. government intervention cannot lead to an efficient outcome when an externality is present. d. only negative externalities can be resolved using government intervention.