Good A is an inferior good. If the price of good A were to suddenly double, the substitution effect would cause the purchases of good A to increase by
A) more than double.
B) exactly double.
C) less than double.
D) Any of the above are possible.
E) none of the above
Question 2
Left alone, with no government interference, a profit-maximizing firm will produce emissions
A) where the MSB curve crosses the MCA curve.
B) at the vertical intercept of the MSB curve.
C) at the horizontal intercept of the MSB curve.
D) at the vertical intercept of the MCA curve.
E) at the horizontal intercept of the MCA curve.
