Which of the following is an example of a positive externality?
a. Nick spends $500 to landscape his yard and his property increases in value by $1,000
b. Mick spends $500 on a stereo, which he plays so loudly that his neighbors are willing to pay him $1,000 not to play the stereo.
c. An increase in the demand for computers causes IBM to hire more workers.
d. Complaints of speeding cause police to increase surveillance.
e. Lisa puts new concrete on her driveway and now the neighboring kids use it for skateboarding.
E
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If a $2 billion increase in investment brings about a $5 billion increase in equilibrium expenditure, we know that the multiplier equals
A) 4. B) 3. C) 10. D) 5. E) 2.5.
Which of the following occurs when an externality is internalized?
A) Higher social well-being B) Higher private benefit C) Larger deadweight loss D) Higher returns to scale
Consider the same ultimatum game as in the previous questions but consider yet new preferences reflecting envy. In particular, now assume players get 1 util per dollar earned. That is all for the player who earns at least as much as the other. The player who earns strictly less than the other loses 1 util for each dollar difference. Which of the following is an offer that arises in a
subgame-perfect equilibrium with these preferences? a. 1. b. 2. c. 4. d. 5.
Which of the following is true about the fish market-day?
a. The quantity supplied of fish increases as price increases. b. The quantity supplied of fish decreases as price increases. c. The quantity supplied of fish does not change regardless of price. d. The quantity supplied of fish will adjust with changes in demand. e. The quantity supplied of fish decreases as price decreases.