Figure 15-1
Figure 15-1 portrays conditions in the monopolized weezil industry. From the diagram, the production of weezils
A. must cause a detrimental externality.
B. must cause a beneficial externality.
C. must cause either a detrimental or a beneficial externality, more information is needed to determine which one.
D. may or may not cause an externality.
Answer: A
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Refer to Figure 4-18. For each unit sold, the price sellers receive after the tax (net of tax) is
A) $12. B) $8. C) $4.40. D) $3.
Suppose an economy is in equilibrium. Also suppose that consumer expectations change as the threat of war increases the likelihood of an increase in taxes. This would result in:
a. an increase in equilibrium income. b. no change in equilibrium income. c. a downward shift of the aggregate supply curve. d. a decrease in equilibrium income. e. a change in the slope of the aggregate supply curve.