Which of the following is FALSE?
A) Social costs do not include private costs.
B) Private costs do not include external costs.
C) If social costs are greater than private costs, "too much" of a good is being produced.
D) Pollution is a social cost.
Answer: A
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The price of a new textbook increases from $75 to $90 while the price of used copies of the textbook increases from $50 to $65. Other things equal, we would expect to observe
A) the quantity demanded of the used textbook to increase while the quantity demanded of the new textbook to fall. B) the quantity demanded of both to fall. C) the demand for the new textbook to increase while the demand for the used textbook to decrease. D) the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.
According to the net exports effect, as the price level falls relative to the rest of the world,
a. foreigners buy fewer goods. b. foreigners buy more U.S. goods. c. the aggregate demand curve shifts to the left. d. the aggregate demand curve shifts to the right. e. the supply of U.S.-made goods increases.