A free market fails when
A) there is government intervention.
B) there is an external effect in either production, consumption, or both.
C) firms that produce goods which create positive externalities go bankrupt.
D) firms that produce goods which create negative externalities earn high profits.
Answer: B
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The expenditure multiplier measures the change in
A) autonomous spending that results from a change in equilibrium expenditure. B) equilibrium expenditure from a change in induced consumption. C) consumption expenditure for a given change in disposable income. D) equilibrium expenditure that results from a change in autonomous expenditure. E) the price level that results from a change in real GDP.
If a company could spend $3 per bicycle on a safety device that would prevent $2,000 worth of harm for every 1,000 bicycles sold, spending the $3 would be a cost-justified precaution
Indicate whether the statement is true or false
A monopolistically competitive market is characterized by:
a. one firm selling a unique product. b. many firms selling identical products. c. many firms selling similar but differentiated products. d. few firms selling identical products. e. few firms selling similar but differentiated products.
In a game, which strategic choice is called a dominant strategy?