When a production quota is used to remedy the problem of the commons, then
A) the production quota is set so that use of the resource is where marginal private benefit equals marginal private cost.
B) the production quota is set so that use of the resource is where marginal social benefit equals marginal private cost.
C) the market equilibrium, but not the efficient outcome, is achieved.
D) all users of the resource have an incentive to cheat on the quota quantity.
D
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Use the following diagrams to answer the next question.
Assume the economy is on aggregate demand AD1. The Fed should ________.
A. move from MS1 to MS3 to raise interest rate and raise investment B. move from MS1 to MS3 to raise interest rate and lower investment C. move from MS1 to MS2 to lower interest rate and lower investment D. move from MS1 to MS2 to lower interest rate and increase investment
A newspaper headline asserts: "Rising Demand Pushes Up Housing Prices." This headline
A) incorrectly implies that the demand for housing can change, whereas in fact only the quantity of housing demanded can change. B) incorrectly implies that the price of housing will rise when demand increases. C) incorrectly implies that more housing will be demanded at higher prices. D) correctly implies that an increase in demand will increase the market clearing price.
The different effects of fiscal and monetary policy in an open economy with mobile capital hinges on their different effect on
A. price levels. B. interest rates. C. the money supply. D. real GDP.
The market clearing price of corn has just increased. Which of the following could have caused this change?
A. a reduction in demand B. an increase in quantity demanded C. a reduction in supply D. an increase in quantity supplied