The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________.  

Tax Fighters, Inc., develops, markets, and sells software for tax preparation. Tax Fighters, Inc. sells IRS Tax Fighter, a software for completing federal income tax forms and Gopher Basher, a software for completing Minnesota state income tax forms. For simplicity, assume that all of the costs in this industry are the fixed costs of developing the software packages themselves. The marginal cost of producing another disk is approximately zero.Consider the following information about the demand for tax software. There are an equal number of consumers in each group. Figure 7.1 shows the maximum that each type of consumer is willing to pay for each product. As vice president for pricing, explain your optimal bundling and pricing strategy to maximize Tax Fighter profits from the sale of tax

software. Be sure to clearly explain why your strategy is optimal.

What will be an ideal response?

Table 28.2 Firm AFirm BFirm CFirm DExternal Costs$0$________175$________Private Costs400250175200Social Costs________350$________250For which firm are all costs internalized in Table 28.2?

A. Firm A. B. Firm B. C. Firm C. D. Firm D.