An externality is an event that
A. is external to economics.
B. always brings harm to someone in the economy.
C. is incidental to some market activity.
D. harms the economy as a whole rather than a particular person.
Answer: C
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A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The fixed cost of production is $20,000. The price of each good is $10. Should the firm continue to produce in the short run?
A) Yes, it should continue to produce because its price exceeds its average fixed cost. B) No, it should shut down because it is making a loss. C) Yes, it should continue to produce because it is minimizing its loss. D) There is insufficient information to answer the question.
When aggregate expenditure is less than? GDP, which of the following is? true?
A) There was an unplanned increase in inventories.
B) Households bought more new homes than they anticipated.
C) Firms spent more on capital goods than they anticipated.
D) All of the above must be true when aggregate expenditure is less than GDP.
The problem of determining what goods and services society should produce exists because:
A) resources are plentiful. B) resources are scarce. C) most of our resources are privately rather than socially owned. D) most of our resources are socially rather than privately owned.
The opportunity cost of a new national park is the:
A. cost of hiring staff and park rangers to provide services for visitors. B. alternative uses for the land and funding for the park. C. increased pollution to the wildlife habitat at the park. D. cost of constructing park buildings and highways to get to it.