If the marginal cost of producing a public good is less than society's total willingness to pay per unit, then
A. the optimal amount of the public good is being produced.
B. more than the optimal amount of the public good is being produced.
C. the amount of output being produced could be either greater than or less than the optimal amount.
D. less than the optimal amount of the public good is being produced.
Answer: D
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Which of the following is the correct way to describe equilibrium in a market?
A) At equilibrium, market forces no longer apply. B) At equilibrium, quantity demanded equals quantity supplied. C) At equilibrium, demand equals supply. D) At equilibrium, scarcity is eliminated.
Holding all variables constant but one and assessing the impact of the one variable that has changed is an example of using
A) the ceteris paribus assumption. B) an economic model based on unrealistic assumptions. C) a flawed economic model. D) an untestable proposition.
As long as trade across borders is unrestricted and exchange rates adjust freely, the purchasing power parity theory predicts that the exchange rate between two national currencies will adjust in the
a. short run because of the actions of arbitrageurs b. long run to reflect differences in the nations' price levels c. long run to reflect changes in the governments' trade policies d. short run because of the actions of speculators e. long run to reflect differences in military power
Would the owner of a profit-maximizing fast-food establishment hire another worker for $55 per day if that worker added faster service, increasing sales and revenue by $50 per day? Why or why not?