Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.

Which of the following items has the largest price elasticity of demand?

A) food B) fruit C) oranges D) oranges from a Wal-Mart SuperCenter

Suppose a certain good conveys either an external cost or an external benefit. If the private cost of the last unit of the good that was produced is equal to the private value of that unit, then the sum of producer and consumer surplus is maximized

a. True b. False Indicate whether the statement is true or false