Inoculation against communicable diseases is an example of an activity that generates positive externalities
a. True
b. False
Indicate whether the statement is true or false
True
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Suppose you work for a government agency that is considering removing certain agricultural subsidies. The removal of these subsidies will increase the price, thus lowering consumers' welfare
Because only aggregate market data is available, you are unable to measure the exact values for the compensated and equivalent variation by consumer. However, you are able to estimate the change in market consumer surplus. Assuming agricultural products are normal goods, how does your estimate of consumer surplus compare to the unknown EV and CV? Explain. Under what conditions will the three measures of welfare be close to one another?
Why would consumer decrease consumption even if their disposable income has not changed?
What will be an ideal response?