In the presence of positive externalities, the market will choose a price that is __________ and produce a quantity that is __________ than the socially optimal price and quantity
a. higher; lower
b. lower; lower
c. higher; higher
d. lower; higher
e. impossible to know without more information about market demand and supply
A
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Suppose that the number of jobs in the fishing industry decreases but the number of jobs in the travel industry increases. Initially, ________
A) the economy remains at full employment B) structural unemployment increases C) there is a shortage of workers in both sectors D) cyclical unemployment increases
How does the substitution effect work when the price of an item drops?
(A) The substitutes for the item also suffer a drop in prices. (B) Consumers buy the item even if they do not particularly want it. (C) The item becomes less and less popular as its price drops. (D) Consumers buy the item as a substitute for other more costly items.