Refer to Figure 5-5. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does D1 represent?

Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good) to decrease?

A) an oil spill that sharply reduces oyster output B) a decrease in consumer income C) a technological advancement in the production of oysters D) an increase in consumer income

A U.S. presidential candidate promises to redistribute income and encourage economic growth. Why might these goals be in conflict? a. The poor, on average, save more than the rich. Taxing the incomes of the rich to transfer to the poor will result in an increase in total savings. b. Taxing the incomes of the rich to transfer to the poor will result in the rich saving more

c. Taxing the incomes of the rich to transfer to the poor will provide disincentives for work and capital accumulation. d. Taxing the incomes of the rich to transfer to the poor will provide incentives for the rich to work more to make up for income lost to taxes.