Which of the following is a problem that keeps people from privately solving externality problems?
a. Each party involved holds out for a better deal.
b. The externality is large.
c. Only problems with a sufficiently large number of parties can be solved.
d. There is a lack of government intervention.
a
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Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico. This subsequently drove up natural gas, gasoline, and heating oil prices. As a result, this should
A) shift the short-run aggregate supply curve to the right. B) shift the short-run aggregate supply curve to the left. C) move the economy down along a stationary short-run aggregate supply curve. D) move the economy up along a stationary short-run aggregate supply curve.
Suppose the demand function is Qxd = 100 ? 8Px + 6Py - M. If Px = $4, Py = $2, and M = $10, what is the cross-price elasticity of good x with respect to the price of good y?
A. 0.04 B. 0.17 C. 0.21 D. 0.38