If a firm is not forced to pay for external costs, it will
A) continue to overproduce the good.
B) continue to under produce the good.
C) request a subsidy from the government.
D) raise prices.
A
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The LM curve shows a series of income-interest rate combinations at which there is equilibrium in the
A) bond market. B) goods market. C) saving-investment market. D) money market.
Refer to Scenario 17.2. If the threshold educational level y* is set at 13 1/3,
A) only individuals in Group K will attain it. B) only individuals in Group M will attain it. C) individuals in both groups will attain it. D) no individuals will attain it. E) some fraction of individuals in each group will attain it.
It has been argued that in the long run monopolistic competition is inefficient because
A. minimum average total costs are not achieved and marginal cost exceeds price. B. minimum average total costs are achieved but price exceeds marginal cost. C. there are few many firms, each with excess capacity, producing too much output. D. there are too many firms, each with excess capacity, producing too little output.
The principal-agent problem is:
A. when stockholders are not acting in the best interest of managers. B. due to managers not being able to monitor stockholder behavior. C. a form of moral hazard. D. a form of adverse selection.