The Law of Demand is the reason behind:
A) the price elasticity of demand having a positive value.
B) the income elasticity of demand having a positive value.
C) the price elasticity of demand having a negative value.
D) the income elasticity of demand having a negative value.
Question 2
Refer to the figure above. The MSB curve lies to the right of the demand curve because the production of Good Y involves ________.
A) positive externalities
B) negative externalities
C) increasing returns to scale
D) decreasing returns to scale
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