Refer to Figure 5-1. Suppose the current market equilibrium output of Q1 is not the economically efficient output because of an externality. The economically efficient output is Q2. In that case, the diagram shows
A) the effect of an external cost imposed on a producer.
B) the effect of a positive externality in the production of a good.
C) the effect of a negative externality in the production of a good.
D) the effect of an external benefit such as a subsidy granted to consumers of a good.
C
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Which of the following is not a basic assumption underlying the theory of consumer behavior?
A) Consumers prefer more to less. B) Consumer preferences depend on the amounts of goods they consume as well as the amounts being consumed by other consumers. C) Goods are continuously divisible, that is, consumers can always purchase one more or one less unit of a good. D) Consumers have well-behaved preferences, that is, preference orderings are complete.
A key factor in producing high economic growth is
A) eliminating foreign trade. B) well-functioning financial markets. C) high interest rates. D) stock market volatility.
Based solely on the graph showing the effective federal funds rate, if you were a borrower with the goal of locking in a thirty-year mortgage with a very low interest rate, which of the following years would have been the best one to take out your loan?
a. 1970
b. 1975
c. 1981
d. 2009
When a firm establishes a long-term contract with another firm, whereby the first firm grants the second independent business the rights to use the former's name, reputation and business format, it is referred to as a:
A. lease contract. B. joint venture. C. franchise agreement. D. standard supply contract.