Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve. As a result
A) the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase.
B) both the equilibrium price and quantity of MP3 players will decrease.
C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
D) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.
D
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A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. Rain barrels provide an external benefit to the community through water conservation. If the government offers a per unit subsidy on rain barrels equal to the per-unit externality, then
a. the after-subsidy equilibrium quantity of rain barrels will be less than the socially optimal quantity of rain barrels. b. the after-subsidy equilibrium quantity of rain barrels will be more than the socially optimal quantity of rain barrels. c. the after-subsidy equilibrium quantity of rain barrels will equal the socially optimal quantity of rain barrels. d. market incentives will be distorted and move the allocation of resources away from the social optimum.
Refer to Figure 3.1. If one of the graphs represents the total cost of an activity, which other graph best represents the marginal cost of the activity?
A. A
B. B
C. C
D. D