A firm that is operating at a loss may continue to operate for a while because of costs that it will still have to pay even if production ceases.
Answer the following statement true (T) or false (F)
True
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Because of the free-rider problem, it is necessary that public bureaus manufacture defense weapons
a. True b. False
Specialization of labor means that: a. production requires a special kind of labor
b. the overall skill level of labor is increasing over time. c. individuals produce goods that they are relatively good at producing and trade for those that they do not produce. d. individuals achieve self-sufficiency in production by producing all the goods that they require. e. exchange within the economy consists of trading in services.
Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced?
a. They are equal. b. The equilibrium quantity is greater than the socially optimal quantity. c. The equilibrium quantity is less than the socially optimal quantity. d. There is not enough information to answer the question.
When government runs a budget deficit, it makes up the difference by:
A. issuing government bonds. B. paying down outstanding debt. C. increasing public saving. D. increasing transfer payments.