A decrease in the price level will _____.
a. shift the consumption function upward
b. shift the consumption function upward
c. result in an upward movement along the consumption function
d. result in a downward movement along the consumption function
e. shift the consumption function downward
Question 2
From society's point of view, the amount of air and water pollution that currently exists is excessive. Which of the following statements are explanations of this excessive pollution?
a. Firms that cause air and water pollution are not paying the full social costs of producing their output.
b. Consumers, who purchase goods from firms that pollute, are not paying a price for these goods which totally reflect the social costs of producing the goods.
c. Private property rights for clear air and clean water are not currently well defined by the judicial system; hence private individuals cannot charge polluters for the external costs these polluters impose on private individuals.
d. All of these.
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