In the presence of positive externalities, a free market will choose a price which is too ____ and produce an output which is too ____ compared with the social optimum.
A. high; low
B. low; low
C. high; high
D. low; high
Answer: B
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Moving along the aggregate supply curve, when the price level rises,
A) the quantity supplied decreases. B) the quantity supplied increases. C) the aggregate demand curve shifts rightward. D) the aggregate demand curve shifts leftward. E) the quantity supplied does not change because the aggregate supply curve is a vertical line.
The difference between the costs (or benefits) created by both technological and pecuniary externalities is that in both cases costs are imposed on _____, but for _____ they are external to the market while _____ are allocated within the market
a. parties to the transaction; technological externalities; pecuniary externalities b. parties to the transaction; pecuniary externalities; technological externalities c. third parties; technological externalities; pecuniary externalities d. third parties; pecuniary externalities; technological externalities
Which of the following will facilitate the enforcement of a cartel?
A) most-favored-customer clauses B) reports of bids on government contracts C) meet the competition or price match D) All of the above
The greater the number of segments the seller can identify in the market, the more distinct prices it can charge
a. True b. False Indicate whether the statement is true or false