Many clothing manufacturers are able to practice price discrimination by selling products in department stores and also in outlet stores

Transactions costs are the

A) costs of using the Coase theorem. B) opportunity costs of conducting a transaction. C) external marginal costs of the externality. D) reason why taxes cannot affect the inefficiency resulting from an external cost. E) external costs when a firm pollutes.

The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 

A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A