Students in a class are assigned to groups to work on a project. A grade will be given for each project, and everyone in the group will receive that grade. For the members of a particular group, the grade is a
A. beneficial externality.
B. public good.
C. detrimental externality.
D. moral hazard.
Answer: B
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According to this Application, Professor Gordon is ________ about future economic growth in the United States and he predicts a ________ increase during this century
A) optimistic; small B) pessimistic; large C) pessimistic; small D) optimistic; large
All of the following are considered input barriers to entry except:
A) control of a key raw material by a single firm. B) the ability to obtain financing for capital projects at more favorable rates than potential competitors. C) the fact that workers in a particular industry belong to a union. D) a patent on a specialized type of capital that is needed to produce a particular product.
Which of these statements correctly explains the shape of the aggregate demand curve? a. As prices fall, nominal income rises and so does the demand for real goods and services
b. Rising prices reduce people's wealth and thereby decrease spending. c. With falling prices, government decides to spend less to increase the price level. d. Businesses increase investment spending in response to higher interest rates caused by inflation. e. As prices fall, domestically produced goods become more expensive relative to foreign goods, resulting in an increase in production.
Which of the following is true?
a. Producing too much pollution could be a market failure, but producing too little research cannot. b. Producing too little research could be a market failure, but producing too much pollution cannot. c. Both producing too much pollution and producing too little research could be market failures. d. Market failures mean that government intervention in those areas will improve the results.