Which of the following statements reflects a situation in which there are external benefits?
A. John's decision to get vaccinated for smallpox reduces the chances that his neighbor Pete will get smallpox.
B. John paints his house and cleans his paintbrushes in the nearby stream.
C. John sells his car to his neighbor Pete at half the first-hand price.
D. John pays 5 percent of his income as taxes.
Answer: A
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The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically-produced product which is now:
A. Lower in price because import competition has risen B. Higher in price because import competition has risen C. Higher in price because import competition has declined D. Lower in price because import competition has declined
The owner of a local pretzel cart has estimated that if he lowers the price of pretzels from $4.00 to $3.00, he will increase sales from 800 to 1,100 pretzels per day. Using the midpoint formula, the demand for pretzels is
A. perfectly elastic. B. inelastic. C. unit elastic. D. elastic.