The social cost of production is:
A. the private cost of production plus the external cost generated by production.
B. the external cost generated by production.
C. the private cost of production that is greater than the benefit of production.
D. the external cost of production that is greater than the benefit of production.
Answer: A
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In agriculture, where firms producing similar goods are often located near each other, supervision of neighboring firm activity is fairly easy. When these firms come together formally to agree on price and restraint of output, their organization is called a(n)
a. collusive venture b. cartel c. cooperative d. agricultural merger e. conglomerate
Which of the following statements is correct?
a. Taxes are more difficult to administer than regulations. b. Taxes provide incentives for firms to adopt new methods to reduce negative externalities. c. Command-and-control policies provide incentives for private decisionmakers to solve their problems on their own. d. Corrective taxes distort incentives.
"Duty-free" shops in airports and on international boats sell merchandise that can be brought into the country without which of the following?
(A) Restrictions on resale (B) Political embargoes (C) Import tariffs (D) Restrictions on quantity
Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. higher; potential B. lower; higher C. lower; potential D. higher; higher