If a nation protects an industry because it believes that there are positive externalities in the production process, it is asserting that the free market will
A) produce less than is optimal from society's point of view.
B) produce more than is optimal from society's point of view.
C) produce the correct amount but charge too high a price.
D) produce the correct amount but charge too low a price.
A
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An increase in real dividend income minus taxes represents
A) a pure substitution effect. B) a pure income effect. C) a combination of income and substitution effects. D) neither a pure income effect nor a pure substitution effect.
An allocation satisfies the output efficiency condition if:
A. for every pair of goods, every input's marginal product equals the marginal rate of transformation. B. for every pair of goods, every consumer's marginal rate of substitution equals the marginal rate of transformation. C. only applies for firms that produce the same product. D. only applies for consumers that consume the same goods.
When two variables have been observed to have a tendency to occur at the same time, we can say there is ________ but not necessarily ________.
A. positivity; causation B. causation; correlation C. normality; correlation D. correlation; causation
Currency traders expect the dollar to depreciate. What impact will this have on equilibrium in the foreign exchange market?
A) The dollar will appreciate, and the equilibrium quantity of dollars will increase. B) The dollar will depreciate, and the equilibrium quantity of dollars exchanged will decrease. C) The dollar will appreciate, and the equilibrium quantity of dollars will decrease. D) The dollar will depreciate, and the change in the equilibrium quantity of dollars exchanged cannot be determined.