Most economists believe that there are positive externalities associated with education. If they're right, the market for education fails to provide an efficient or socially optimal allocation of resources because the equilibrium
a. price and quantity would be too high
b. price would be too low and quantity would be too high
c. price and quantity would be too low
d. price would be too high and quantity would be too low
e. price and quantity would be just right
D
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We refer to situations in which individuals need to act collectively to reach solutions that will make everyone better off as:
A. collective-action problems. B. free-rider problems. C. moral hazard problems. D. public-mind problems.
Which of the following is an example of a negative externality?
A. A Japanese company begins to produce cars and earns large profits. B. An employee of a chemical company spills acid on his arm, causing severe damage. C. John plants fruit trees in his front yard, which attracts bees, which sting neighbor Mary. D. Sally buys coffee at McDonald's, spills some on her, and burns her arm.
Which of the following items can you definitively say is part of the underground economy?
A. Income from legal pursuits. B. Payments to family members for performing household tasks. C. Unreported income. D. Child care services provided by a legitimate company.
Which of the following changes is most likely to happen when there is a decrease in the supply of money in a market that was initially in equilibrium?
What will be an ideal response?