Everyone in the neighborhood has been complaining about the deteriorating condition of the park, but nobody has cleaned it up. Why not?
A. There is an excess demand for parks in the neighborhood.
B. No single person's benefit from cleaning the park exceeds that person's cost of cleaning it.
C. The social benefit of cleaning the park exceeds the social cost of cleaning it.
D. There is an excess supply of parks in the neighborhood.
Answer: B
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Economists use the term variable costs to refer to
a. prices of inputs that are subject to sudden change, like fuel. b. an increase in the price of any input. c. costs that vary with the type of final product being produced. d. costs that vary with the quantity of output produced.
Which of the following results in a positive externality?
A) Visiting a beach B) Recycling of waste C) Buying a room heater D) Following a healthy lifestyle
The Brooks Appliance Store and the Lefingwell Appliance Store (both are located in the same city) each sell an identical washer-dryer pair. The owner of each store considered offering the washer-dryer pair for $700, but decided on a price of $500
If this is a Nash equilibrium we can conclude that A) the owners of the stores feared that charging $700 could be used as evidence of collusion. B) charging $500 was the most profitable strategy for each store, regardless of what price was charged by the other store. C) the stores were less concerned about making a profit from the washer-dryer pair than they were with attracting customers who would also buy other appliances. D) each store owner feared charging the higher price would result in being undercut by the other store charging the lower price.
The fact that a gallon of gasoline commands a higher market price than a gallon of water indicates that:
A. gasoline is an economic good but water is not. B. the marginal utility of gasoline is greater than the marginal utility of a gallon of water. C. the average utility of a gallon of gasoline is greater than the average utility of a gallon of water. D. the total utility of gasoline exceeds the total utility of water.