Whenever the interest rate goes up, the price of bonds will go down

The figure above shows the market for iPods. Which of the following shifts the demand curve from D0 to D2?

A) a decrease in the price of iPods B) a decrease in the price of Zunes, a substitute for iPods C) an increase in the price of iPods D) a decrease in people's incomes if iPods are a normal good E) a requirement that all students at universities have an iPod

Sometimes the government deals with externalities by creating laws to regulate behavior instead of using taxes to correct the market failure. So, requiring auto manufacturers to install a device called a catalytic converter which removes some toxins from exhaust may be preferable to a gas tax that reduces driving levels. This route is often preferred because:

a. c and e. b. it requires less technological development. c. it doesn't penalize drivers of clean cars. d. only car drivers pay for the externality. e. the cost of the externality is unknown.