In the case of a negative externality, the entire marginal social cost curve lies
A. below the entire marginal private cost curve by the amount of the external costs associated with the negative externality.
B. below the entire demand curve by the amount of the external costs associated with the negative externality.
C. above the entire marginal private cost curve by the amount of the external costs associated with the negative externality.
D. above the entire demand curve by the amount of the external costs associated with the negative externality.
E. none of the above
Answer: C
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An outward shift in the entire production possibilities frontier
A. represents economic decline. B. means that previous levels of production are now unobtainable. C. means that the only way the economy can increase the production of one good is by producing less of an alternative good. D. represents economic growth.
The instructor of your wine tasting class trips and falls while discussing the merits of spitting out the wine samples after you have tasted them instead of swallowing them, so as not to get inebriated during the class
You are afraid that he might have hurt himself in the fall, but since no one else in the class is rushing up to help him, you mistakenly believe that the rest of the class thinks the instructor is trying to prove a point about drinking too much in the class. You therefore doubt your own judgement and decide to also not get up to help the instructor back to his feet. This is an example of A) diffusion of responsibility. B) pluralistic ignorance. C) mob mentality. D) passing the buck.
If the economy is in a recessionary gap and the government attempts to balance the budget, the effect will be to
A. counteract the recession. B. worsen and prolong the recession. C. end the recession sooner. D. increase the level of real GDP.
Refer to the above table. Real GDP in 2019 is
A. 682.9. B. 700. C. 717.5. D. 146.4.