The Coase theorem states that
a. under certain circumstances government intervention is not needed to reach efficient outcomes when an externality is present.
b. government intervention is always required to reach an efficient outcome when an externality is present.
c. government intervention cannot lead to an efficient outcome when an externality is present.
d. only negative externalities can be resolved using government intervention.
a
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The decrease in investment that occurred as a result of banks being unwilling to lend to businesses after the collapse of the housing bubble caused aggregate:
A. demand to increase. B. demand to decrease. C. supply to increase. D. supply to decrease.
Which of the following sectors in the economy accounted for about 70% of the spending in the U.S. during 2009?
a. The government b. Firms c. The foreign sector d. Investors e. Households
Which of the following would not enhance economic growth?
a. Subsidies for investments in physical capital b. An increase in the corporate profits tax c. Subsidies for investments in human capital d. A tax cut that encourages saving e. Subsidies for research and development expenditures
Refer to the above figure. A farmer has 50 acres of land on which to grow wheat or beans. An acre of land yields 400 bushels of beans or 800 bushels of wheat. Which of the following is a possible combination of beans and wheat that can be grown, assuming the land is farmed efficiently?
A. 20,000 bushels of beans and 40,000 bushels of wheat B. 5,000 bushels of beans and 5,000 bushels of wheat C. 16,000 bushels of beans and 8,000 bushels of wheat D. 30,000 bushels of each