A variable that responds to a change in another variable is called a(n) _______ variable.

A furniture maker used to buy its wood, but has now bought the lumber company. How does this impact GDP?

A) It reduces it. B) It does not change. C) It increases it. D) We cannot tell.

Suppose that electricity producers create a negative externality equal to $6 per unit. Further suppose that the government imposes a $8 per-unit tax on the producers. What is the relationship between the after-tax equilibrium quantity and the socially optimal quantity of electricity to be produced?

a. They are equal. b. The after-tax equilibrium quantity is greater than the socially optimal quantity. c. The after-tax equilibrium quantity is less than the socially optimal quantity. d. There is not enough information to answer the question.