In the spring, I enjoy the fragrance coming from my neighbors' flowers. The fragrance is is an example of
A) a negative externality.
B) a private good.
C) the need for antitrust legislation.
D) a free rider problem.
Answer: D
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What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?
What will be an ideal response?
Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. What is the expected value of the payoff in the first game?
A. $5.75 B. $5.00 C. $4.75 D. $4.50
Economist Kenneth Arrow wrote a famous book in 1951 in which he took up the question,
a. Is there a perfect voting system? b. Are preferences transitive? c. Is a dictatorship a good form of government? d. Does Democracy work?
The rising part of a perfectly competitive firm’s ________ cost curve is the firm’s short run _________ curve.
A) average total; supply B) average variable; demand C) average fixed; demand D) marginal; supply