Dry cleaning of clothing produces air pollutants. Therefore, in the market for dry cleaning services, the equilibrium price
A) and output are too low to be optimal.
B) and output are too high to be optimal.
C) is too low to be optimal, and equilibrium quantity is too high.
D) is too high to be optimal, and equilibrium quantity is too low.
E) is optimal, but there is an excess supply.
C
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The principle of diminishing marginal utility says that:
a. as more of a good or service is consumed, demand decreases. b. as more of a good or service is consumed, the price will rise. c. the marginal utility of additional units consumed increases. d. an increase in income causes demand to increase. e. the marginal utility of additional units consumed decreases.
The example of an inflationary gap in 2006-2007 suggested that the economy adjusts
a. rapidly to inflationary gaps by lowering prices. b. rapidly to inflationary gaps by raising prices. c. slowly to inflationary gaps by lowering prices. d. slowly to inflationary gaps by increasing inflation.