Economic models like the AD-AS model tell us:
A. how to determine which economic variables are changing.
B. what to expect if we know what is happening.
C. exactly what is happening.
D. nothing useful about the real world.
Ans: B. what to expect if we know what is happening.
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The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. The efficient quantity of transportation services is ________ and the corresponding price is ________
A) 120; $14 B) 120; $8 C) 80; $12 D) 80; $6
A person's sensitivity to a price change for a good, such as breakfast cereal, depends on all of the following except the
a. price of the good b. cost of producing the good c. person's income d. availability and closeness of substitutes e. time the person has to adjust to the price change