An economy produces only two goods: paper and scissors. Dyes from paper production pollute a nearby river. Use a production possibilities curve (PPC) to illustrate your explanation of how the unfettered market would fail to provide the efficient mix of paper and scissors.
What will be an ideal response?
Figure 15-3
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Refer to Figure 7-3. What is the value of domestic producer surplus after the imposition of a quota?
A) $10.75 million B) $15.75 million C) $17.25 million D) $27.75 million
In order to reduce risk and increase the safety of financial institutions, commercial banks and other depository institutions are prohibited from
A) owning municipal bonds. B) making real estate loans. C) making personal loans. D) owning common stock.
Perfectly competitive firms ____ earn zero economic profit in long-run equilibrium because ____
a. always; firms in perfectly competitive industries always maximize output and so flood the market until the equilibrium price of output is driven to zero b. sometimes; the demand curve for an individual perfectly competitive firm may or may not cross the company's long-run average total cost curve at its lowest point c. always; firms enter whenever their economic profit is positive and exit whenever it's negative, so in long-run equilibrium economic profit must always be zero d. never; no firm would be willing to produce if it received zero economic profit
If marginal cost is greater than average total cost, average total cost:
A. is falling. B. is rising. C. will not change. D. is minimized.