Answer the following statement(s) true (T) or false (F)
1. Environmental pollution can be characterized as a market failure that distorts the classical market outcome.
2. If we define the relevant market as “environmental quality,” then the market failure is due to the presence of a negative externality.
3. If market is defined as a good or service whose production or consumption generates environmental damage, then the market failure is due to a negative externality.
4. A public good is characterized as possessing either nonrivalry in consumption or nonexcludable benefits.
5. Nonrivalness means that one person’s consumption does not preclude that of another.
1. True
2. False
3. True
4. False
5. True
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Debit cards and e-checks are not money because
A) they can be forged easily. B) they can fail their purpose of being mediums of exchange as a result of technical difficulties. C) they are just instruments to transfer money between people. D) not all banks offer them and not all businesses accept them. E) they are not regulated by the government.
Necessities and luxuries are both types of normal goods
a. True b. False
An example of an externally generated business cycle is the war-induced theory
Indicate whether the statement is true or false
Suppose the price of good X increases and consumers purchase more of good Y. Which of the following statements is necessarily true about good Y? a. Good Y is a normal good
b. Good Y is an inferior good, but not a Giffen good. c. Good Y is an inferior good and a Giffen good. d. Good Y could be a normal or inferior good.