The spending multiplier is:

In the summer 2012 the lobster catch in Maine was especially large, but instead of celebrating the fisherman were suffering from a lower total revenue

(Source: New York Times, July 28, 2012 ) We learn from the article that despite the larger quantity of lobster caught, the total revenue of the fisherman decreased. This fact means that the demand for lobster is A) unit elastic. B) elastic. C) inelastic. D) perfectly elastic.

If the external costs of production are NOT taken into account, then production will

A) be less than socially desirable. B) be more than socially desirable. C) be the same since only prices are affected by externalities. D) cease.