When a tariff is applied to a good exported by a foreign monopoly (with no home producer), the price net of the tariff received by the seller is _________.
a. lower than under free trade
b. higher than under free trade
c. the same as under free trade
d. so high that no sales are possible
Answer: a. lower than under free trade
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If a road is congested, then use of that road by an additional person would lead to
a. a negative externality. b. a positive externality. c. a natural monopoly. d. a free-rider problem with rush hour drivers stuck in traffic. e. none of the above.
What is the opportunity cost of a decision?
What will be an ideal response?
(Appendix) In the production function Q = 10L1/2K1/2, if the inputs are quadrupled, are there economies of scale? 
.
What will be an ideal response?
Economists believe that government regulation to prevent companies from making false or deceptive claims may be justified when:
A. consumers already have complete information about the product due to other market forces. B. the equilibrium quantity and price are lower than they would be if consumers had complete information. C. the equilibrium quantity and price are higher than they would be if consumers had complete information. D. the equilibrium quantity and price are equal to the values they would take if consumers had complete information.