Question

16. The cross elasticity of demand for Cheez-its and Cheddar Jack Cheez-its is likely to be

1. positive because they are substitutes.
2. positive because they are complements.
3. negative because they are substitutes.
4. negative because they are complements.
5. negative because they are inferior goods.

17. In the summer of 20017, the price of gasoline increased greatly. If the demand curve for gasoline did not shift, which of the following occurred?

1. Drivers received no consumer surplus after the price increase.
2. Consumer surplus increased if drivers drove less.
3. Consumer surplus decreased.
4. If consumers drove the same amount, they received less total benefit.
5. Both the marginal benefit from each gallon of gasoline and the consumer surplus from each gallon of gasoline decreased.

18. If a producer must pay the cost of his or her pollution because property rights have been assigned, then

A) pollution will be completely eliminated.

B) the supply curve will shift rightward as the new costs are added.

C) the supply curve will shift leftward as the new costs are added.

D) consumers will now consume more of the good because the external costs are reduced.

E) there is no longer any marginal benefit from the good or service being produced.

Answer 1

1) a. positive because they are substitutes.

2) c. Consumer surplus decreased

3) C) the supply curve will shift leftward as the new costs are added.