Which of the following is true?
A) MSB = MB + Marginal external benefit.
B) MB = Marginal external benefit - MSB.
C) MB = Marginal external benefit + MSC.
D) MSB = Marginal external cost - marginal external benefit.
E) MSB = MB + Marginal external benefit - Marginal external cost.
A
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If the aggregate supply curve is the horizontal an increase in government spending will result in which of the following?
A) Increase/Increase B) Increase/No change C) Increase/Decrease D) No change/Increase E) No change/No change
Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $1, what changes in the market would result in an economically efficient output?
A) The price would increase, the quantity supplied would increase, and the quantity demanded would decrease. B) The price would increase, quantity demanded would increase, and quantity supplied would decrease. C) The quantity supplied would increase, the quantity demanded would decrease, and the equilibrium price would increase. D) The price would increase, the demand would increase, and the supply would decrease.