Given high transactions costs, the best way to deal with a positive externality is
A. to allow both parties to negotiate.
B. to limit the extent of the externality.
C. to subsidize it.
D. to tax it.
Answer: C
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The "tragedy of the commons" refers to a phenomenon where
A) people do not internalize an externality. B) people have distinct property rights to a resource. C) people overuse a common resource. D) individuals are not allowed to use a common resource.
Which of the following is the best example of a firm operating in a monopolistically competitive market?
A. A Kansas wheat farmer. B. TGI Fridays, a family restaurant. C. U.S. Postal Service. D. Boeing, an aircraft manufacturer
How can a warranty at the seller's expense signal that a product is high quality?
What will be an ideal response?
Voters may choose to remain uninformed about an issue because of:
A. the special-interest effect. B. rational ignorance. C. bureaucratic inefficiency. D. the shortsightedness effect.