With defined property rights, an externality

A) can only be corrected with government intervention.
B) will not lead to a misallocation of resources.
C) may be internalized with voluntary contracting, under certain circumstances.
D) must lead to society producing inside its production possibilities frontier.


Answer: C

Economics

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If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the CPI in the later year equals

A) 225. B) 250. C) 300. D) 450.

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A downward shift in the consumption function can be caused by:

a. expectations of higher inflation. b. an increase in wealth. c. a lower price level. d. none of these.

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A firm enjoys a positive economic profit when:

a. the demand curve touches the average cost curve at the profit-maximizing level of output. b. the marginal revenue curve has a negative intercept on the ordinate axis. c. the average revenue curve lies below the average cost curve at the profit-maximizing level of output. d. the marginal cost is declining at the profit-maximizing level of output. e. the average revenue curve lies above the average cost curve at the profit-maximizing level of output.

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If the current year CPI is 90, then the price level has decreased 10 percent since the base year

a. True b. False Indicate whether the statement is true or false

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