By altering market incentives, the government tries to shift
A. Private costs to society.
B. External costs to the producer.
C. External costs to society.
D. Social costs to the producer.
Answer: B
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The efficient transfer price is
a. the upstream division's average cost b. the upstream division's marginal cost c. the downstream division's average cost d. the downstream division's marginal cost
Which of the following is a characteristic of capitalism?
a. Equality of income. b. Government decision-making is preferred to decentralized decision-making. c. Market determination of prices and quantity. d. Government ownership of all capital.
Many economists believe that in our modern economy, firm size is most directly determined by
a. concentration ratios that decrease as the number of firms decreases b. diseconomies of scale that make it less costly to increase firm size c. easy entry of new firms when there are economies of scale d. government policies that dictate optimal firm investment levels e. modern technology that gives an advantage to large-scale production methods
Refer to the graph shown. With an effective price ceiling at Pc, the effect is an implicit tax on:
A. consumers of area D and a subsidy to suppliers of that area. B. suppliers of area C and a subsidy to consumers of that area. C. suppliers of area D and a subsidy to consumers of that area. D. consumers of area C and a subsidy to suppliers of that area.