The law of demand is illustrated when:
A) an increase in tuition encourages more students to enroll in college because the quality of education has risen.
B) an increase in the purchases of personal computers results from lower prices.
C) higher oil prices cause oil companies to drill for new sources of oil.
D) higher fees for the use of public golf courses force golfers to purchase fewer golf balls.
Answer: B) an increase in the purchases of personal computers results from lower prices.
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The producer surplus of making and selling 10 chairs is found by
A) multiplying the selling price by 10. B) subtracting the marginal cost from the selling price for each chair and summing the differences for all 10 chairs. C) subtracting from the total revenue the cost of producing one chair multiplied by 10. D) adding the marginal cost and the price of all 10 chairs. E) None of the above answers is correct.
When there is an externality in a market
A) government intervention may increase economic efficiency. B) the government should use price controls to enable the market to reach equilibrium. C) the externality will move the market to an economically efficient equilibrium. D) the externality will cause the market price to be less than or greater than the equilibrium price.