Graphically, the presence of an external cost that is ignored by producers can be shown as
A. a market supply curve the same as the market supply curve for which the producers have to pay for the external cost.
B. a market supply curve to the right of the market supply curve for which the producers have to pay for the external cost.
C. a market supply curve to the left of the market supply curve for where the producers have to pay for the external cost.
D. the absence of a market supply curve.
Answer: B
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Suppose the market-clearing price of guitars is $500, but the prevailing price is currently $700. Pick the correct statement
A) There is a shortage of guitars. B) Guitar sellers would not be able to successfully sell all they planned to sell. C) Guitar buyers would not be able to successfully buy all they planned to buy. D) All of the above are true. E) None of the above is true.
The monopoly illustrated in the figure above is unregulated and charges a single price. The deadweight loss created by the monopoly is
A) $0. B) $22.50. C) $45.00. D) $90.00.
When a firm is considering whether to buy a new piece of equipment with retained earnings, the amount of interest that could be earned on that money is an explicit cost and should be treated as such
Indicate whether the statement is true or false
In a general equilibrium model, a tax on a single factor in its use only in a particular sector can affect returns to all factors in all sectors.
A. True B. False C. Uncertain