A large factory pours its toxic wastewater into a nearby river, and as a result, the residents of a downstream community experience high rates of illness and birth defects. The economic problem illustrated by this example is
A. marginal thinking.
B. comparative advantage.
C. repealing the laws of supply and demand.
D. externalities.
E. productivity growth.
Answer: D
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Suppose the price of gold is initially 300 U.S. dollars per ounce in New York and 450 Canadian dollars per ounce in Toronto, Canada. If the law of one price holds for gold, the nominal exchange rate is ________ Canadian dollars per U.S. dollar. If Canada experiences inflation, such that the price of gold rises to 510 Canadian dollars per ounce, but the U.S. does not experience any inflation, the nominal exchange rate would be ________ Canadian dollars per U.S. dollar.
A. 0.67; 0.59 B. 1.70; 1.50 C. 0.59; 0.67 D. 1.50; 1.70
Tina withdraws $20,000 from her money market account to start up her own house cleaning business. Over that time, the account would have earned 3 percent interest. In order to properly account for all costs of her business, Tina must not forget:
A. the opportunity cost of $2,600. B. the fixed cost of $20,600 and the opportunity cost of $600. C. the fixed cost of $20,600. D. the opportunity cost of $600.
Additions to inventory subtract from GDP, and when the goods in inventory are sold, the reductions in inventory add to GDP
a. True b. False Indicate whether the statement is true or false
A typical economic good has which one of the following characteristics?
A) The desired quantity exceeds the quantity available at a zero price. B) The quantity available exceeds the desired quantity at a zero price. C) It uses no resources to produce. D) It is never scarce.