Suppose that deposit insurance were reduced to a maximum of $50,000 per account (instead of $250,000). This would address the specific market imperfection of

Tony's Italian Ice is a monopolistically competitive firm. If Tony's earns a profit in the short run, which of the following is most likely to occur?

A) New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the right. B) New firms that sell Italian ice will enter the market and Tony's demand curve will become more inelastic. C) New firms that sell Italian ice will enter the market and Tony's cost curves will shift to the left. D) New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the left.

Over $140 billion was spent on transportation in 2007, with the lion's share being handled by state and local governments. Roughly 78 percent of transportation spending was allocated to

a. enforcement of fuel efficient standards b. the highway system c. bridges d. city streets e. traffic lights