If there are significant external costs associated with the production of a product, it can be said that the private cost of production to the firm ____ the cost to society associated with this product and output should ____ to move toward the efficient situation
a. overstates; increase
b. understates; increase
c. overstates; decrease
d. understates; decrease
d
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What is a Giffen good?
What will be an ideal response?
Use the following two statements in answering this question: I. For all Giffen goods the substitution effect is larger than the income effect. II. For all inferior goods the substitution effect is larger than the income effect
A) I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) I and II are false.
The fallacy of composition is essentially the error of: a. confusing association with causation
b. confusing normative economics with positive economics. c. generalizing from the individual to the whole. d. omitting relevant variables from an economic model.
The __________ school of economics holds that lower tax rates and less government intervention in the private sector are the only ways to stimulate saving, investment, and productivity.
Fill in the blank(s) with the appropriate word(s).