Suppose that flu shots create a positive externality equal to $20 per shot. What is the relationship between the market equilibrium output level and the efficient equilibrium output produced?
a. They are equal
b. The market equilibrium output level is greater than the efficient equilibrium output level.
c. The market equilibrium output level is less than the efficient equilibrium output level.
d. None of the above.
c
You might also like to view...
Which of the following would be expected to increase the demand for money in the U.S.?
A. Financial investors become concerned about increasing riskiness of stocks. B. The economy enters a recession. C. On-line banking allows customers to transfer funds between checking and stock mutual funds 24 hours a day. D. Political instability decreases dramatically in developing nations.
The law of supply tells us that other things remaining the same, as the:
a) cost of producing gasoline increases, the price of gasoline rises. b) price of gasoline falls, the quantity of gasoline supplied decreases. c) supply of gasoline increases, the price of gasoline falls. d) cost of producing gasoline falls, the supply of gasoline will increase. e) price of gasoline rises, the quantity of gasoline supplied decreases.
The depreciation of a country's currency causes the price of imports to
A. Rise and the prices of exports to fall. B. Fall and the prices of exports to fall. C. Fall and the prices of exports to rise. D. Rise and the prices of exports to rise.
Selling Treasury bonds to finance a federal deficit crowds out private investment by driving interest rates down.
a. true b. false