Air pollution best illustrates
A. An external cost.
B. An inequity.
C. Government failure.
D. Market power.
Answer: A
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You own a 2007 Ford Explorer. Although it has high mileage, you have maintained it very well
You want to sell it, but after checking the prices other owners of 2007 Ford Explorers are able to get for their cars in the used car market, you decide the prices are too low and you decide not to sell. This is an example of A) the "lemons problem." B) moral hazard. C) economies of scale. D) low information costs.
If public goods can be produced more efficiently, then
A) public goods increase, and private goods may increase or decrease. B) public goods production stays the same, and private goods increase. C) public goods and private goods both increase. D) public goods production falls, and private goods production rises.
Behavioral economic policy is likely to:
A. be based on the assumption of rationality. B. take into account people's predictably irrational behavior. C. suggest no government involvement. D. assume that the way choices are presented doesn't affect the decision made.
In order for large countries to successfully use tariffs to increase well-being,
A) they must have significant market power . B) the deadweight loss created by the tariff must be greater than the government revenue the tariff generates. C) domestic production must increase more significantly than for the small country case. D) domestic consumption and imports must decrease more significantly than in the small country case.